New Delhi: In view of rising production costs, the Commission for Agricultural Costs and Prices (CACP) has recommended a 17.25 percent increase in the fair and remunerative price (FRP) for sugarcane to Rs 170 per quintal for the 2012-13 sugar year (October-September).
The CACP is a statutory body and advises the government on the pricing policy for major farm produce.
"We have recommended a substantial rise in the FRP for cane to Rs 170 a quintal for 2012-13 season after carefully studying the increasing cost of production, including labour expenses and other (factors)," a senior CACP official said.
While the FRP for sugarcane in the 2011-12 sugar year (or season), beginning next month, has been fixed at Rs 145 per quintal, the CACP's recommendation on raising this price would be applicable from October, 2012.
The FRP is the minimum price that sugarcane farmers are legally guaranteed. However, the sugar mills are free to offer any price above the FRP.
The FRP is fixed after taking into consideration the margins for sugarcane farmers, based on the cost of production of sugarcane, including the cost of transportation.
The FRP is linked to a basic recovery rate of 9.5 percent, subject to a premium of Rs 1.46 for every 0.1 percentage point increase in recovery above 9.5 percent. The recovery rate is the quantity of sugar that is produced from the crushed cane.
Usually, the government accepts the cane price recommended by the CACP.