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SUGAR

Modi-led CCEA approves sugarcane FRP at Rs 275 per quintal for SS ’19-20
Friday, 26 July, 2019, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the fair and remunerative price of sugarcane payable by sugar mills for 2019-20 sugar season at Rs 275 per quintal of sugarcane. Besides, the CCEA has decided that a premium of Rs 2.75 per quintal will be given for every 0.1 per cent increase above 10 per cent in the recovery.

“The FRP is based on the recommendation of the Commission of Agricultural Costs and Prices (CACP) as per its report of August 2018 on the price policy for sugarcane for the 2019-20 season. The CACP has recommended the same price for the 2019-20 sugar season as it was for the sugar season 2018-19,” the government said in a statement.

CCEA has also approved the creation of buffer stock of 40 lakh metric tonne (LMT) of sugar for one year, and to incur estimated maximum expenditure of Rs 1,674 crore for this purpose.

However, the Government that based on the market price and availability of sugar, this may be reviewed by the Department of Food and Public Distribution any time for withdrawal/modification.

And the reimbursement under the scheme would be met on a quarterly basis to sugar mills, which would be directly credited into farmers’ account on behalf of mills against cane price dues and subsequent balance, if any, would be credited to the mill’s account.

Abinash Verma, director general, ISMA (Indian Sugar Mills’ Association), said that two much-anticipated and much-awaited excellent decisions have been taken by the government today pertaining to the sugar sector.

The first decision to give the same FRP as last year at Rs 275 per quintal of sugarcane at 10 per cent recovery is on expected lines and as recommended by CACP.

“The FRP has increased quite steeply in the last few years and sugarcane has outstripped the returns to farmers from other crops. This decision will restore some balance amongst the crops,” Verma said.

“It will benefit the sugar mills because 70 to 75 per cent of the cost of producing sugar is only on account of sugarcane. At the same time, it will help keep cane price arrears of farmers under control,” he added.

“Since the average productivity of sugarcane has increased quite steeply in the last several years, the farmers will continue to get better revenue realisation from the same plot of land. Therefore, through this decision, the Government has taken care of the interests of farmers and millers at the same time,” Verma said.

He added that the second decision to create a buffer stock of four million tonne for one year, higher by one million tonne over the last year, which may be effective from August 1, 2019, is another very positive news for the industry.

“The industry is carrying surplus sugar inventory, and, therefore, the decision of the government to subsidise the full carrying cost for four million tonne of sugar for one year, amounting to a direct subsidy of Rs 1,670 crore, will reduce a substantial part of the burden of sugar mills,” Verma said.

“Not only will it give extra cash flows to sugar mills, but will also hugely improve market sentiments, because the creation of buffer stock immediately withdraws four million tonne of sugar from the market for the next 12 months,” he added.
 
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