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SUGAR

Sugarcane FRP unchanged at Rs 275 per quintal for sugar season 2019-20
Thursday, 25 July, 2019, 16 : 00 PM [IST]
Our Bureau, New Delhi
The government kept the FRP (fair and remunerative price) of sugarcane unchanged at Rs 275 per quintal for the sugar season (SS) 2019-20 (i.e., between October 2019 and September 2020).

The sugarcane FRP was also unchanged for the year 2016-17. In the following years, the sugarcane FRP was increased by 10.9 per cent to Rs 255 per quintal in 2017-18 at 9.5 per cent recovery rate, which was further raised by 7.8 per cent to Rs 275 per quintal in 2018-19 at 10 per cent recovery rate.

From the above charts (Chart 1, 2 and 3) it can be observed that when the sugarcane FRP was kept unchanged at Rs.230 per quintal for the season 2016-17, the sugarcane arrears reduced to Rs 9,526 crore. This was also backed by higher sugar prices at Rs 39 per kg during 2016-17.

In the next sugar season, when the sugarcane FRP was increased to Rs 255 per quintal, the sugarcane arrears increased to Rs 19,780 crore. Also, lower sugar prices at Rs 34 per kg during 2017-18 resulted in higher cane arrears.

Therefore, with the introduction of sugarcane FRP at same level at Rs 275 per quintal for the season 2019-20, the sugarcane arrears for the season 2019-20 can be expected to remain at same level compared to the cane arrears of 2018-19 season assuming that sugar prices remain range bound given higher sugar inventories.

As on July 17, 2019, the cane arrears for the season 2018-19 so far stands at Rs 15,222 crore. Also, the same cost of sugarcane will bring relief to the sugar mills and will encourage them to pay cane arrears.

The government also approved a proposal to create four million tonne of sugar buffer stock. This will lead to reduction in sugar inventory and will facilitate payment of cane arrears.

The price of sugarcane has been unchanged to keep the sugarcane arrears under check.

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