In respect of sugar mills
that have a recovery of more than 10 per cent, the FRP will be increased by Rs 2.85 for every 0.1 per cent increase in recovery above 10 per cent, the food ministry clarified.
In the same manner, FRP will be reduced by Rs 2.85 for every 0.1 per cent decline in recovery below 10 per cent.
But, this will be limited only upto 9.5 per cent.
For those sugar mills, which have a recovery of less than 9.5 percent for the 2020-21 season, the FRP has been fixed at Rs 270.75 per quintal.
The food ministry also clarified that the cost of producing sugar (A2+FL) as estimated by the Commission for Agriculture Costs and Prices (CACP) for 2020-21 season was estimated at Rs 159 per quintal, therefore, the FRP of sugarcane for 10 per cent recovery fixed at Rs 285 per quintal is almost 80 per cent more than the cost.
“Keeping the estimated sugar production for 2020-21 season, the total remittance to the sugarcane farmers by sugar mills
will be more than Rs 93,000 crore based on the current FRP,” the food ministry said.
Government feels that liking the FRP to a base recovery rate of 10 per cent will benefit more farmers as according to estimate, out of the more than 500 sugar mills that operate in the country, a significant number have a recovery rate of 10 per cent or more.
The FRP, which is determined under Sugarcane (Control) Order, 1966, is the minimum price that sugar mills have to pay to sugarcane farmers.
Major sugarcane producing states such as Uttar Pradesh, Punjab and Haryana fix their own sugarcane prices called 'state advisory prices' (SAPs), which are usually higher than the Centre's FRP.
The government estimates the country's total sugar production to be 28-29 million tonne in the current year ending next month, compared to 33.1 million tonnes during 2018-19 due to sharp fall in cane acreage in Maharashtra and Karnataka.