The Cabinet Committee on Economic Affairs (CCEA) is mulling a proposal to hike the sugarcane prices, which the mills are required to pay to farmers by 17% to Rs 170 per quintal for 2012-13 marketing year (October-September) period. CCEA will be taking the decision on it pursuant to Food Ministry accepting CACP’s recommendation for the same.
The Government receives advice from a statutory body the Commission for Agricultural Costs and Prices (CACP) on farm pricing policy front. For the 2012-13 marketing year, CACP has recommended a 17.25% hike in the FRP on account of rising input production costs. The CCEA in its meeting scheduled is considering of increasing Fair and Remunerative Price (FRP) of sugarcane for 2012-13. The Government by and large accepts the cane price recommended by the CACP.
The FRP is the minimum price that sugarcane farmers are legally guaranteed and for the ongoing marketing year it stands at Rs 145 per quintal. The FRP is the sugarcane price fixed by the Centre however some states like Uttar Pradesh and Tamil Nadu follow the policy of state advisory price (SAP), where they declare their own rate.
However, the SAP is higher than the FRP. In Uttar Pradesh, compared to Centre's FRP of Rs 145 a quintal the SAP for the current year stands at Rs 250 per quintal. The FRP is linked to a basic recovery rate of 9.5%, subject to a premium of Rs 1.46 for every 0.1% point increase in recovery above 9.5%. The recovery rate is the quantity of sugar that is produced from the crushed cane.
Due to bumper production of sugarcane, India, the world's second largest sugar producer, is currently exporting the sweetener which stood at 357.66 million tonnes in 2011-12.
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