New Delhi: The Cabinet Committee on Economic Affairs (CCEA) will Wednesday consider a proposal to increase the sugarcane price that mills are required to pay to farmers by 17 percent to Rs 170 per quintal in 2012-13.
"The CCEA is scheduled to meet Wednesday. It will discuss increase in Fair and Remunerative Price (FRP) of sugarcane for 2012-13 marketing year (October-September)," a source said.
The FRP, the minimum price that sugarcane farmers are legally guaranteed, for the ongoing marketing year stands at Rs 145 per quintal.
In view of rising production costs, the Commission for Agricultural Costs and Prices (CACP) has recommended a 17.25 percent increase in the FRP for the 2012-13 marketing year.
The Food Ministry has accepted the CACP's recommendation and has moved a CCEA note, which will be considered tomorrow, sources said. The CACP is a statutory body and advises the government on the pricing policy for major farm produce.
The FRP is the sugarcane price fixed by the Centre but there are some states like Uttar Pradesh and Tamil Nadu which announce their own rate called state advisory price (SAP).
The SAP is higher than the FRP. In Uttar Pradesh, for example, the SAP for the current year stands at Rs 250 per quintal, compared to Centre's FRP of Rs 145 a quintal.
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.
India, the world's second largest sugar producer, is currently exporting the sweetener due to bumper production of sugarcane, which stood at 357.66 million tonnes in 2011-12.
First Published: Wednesday, July 18, 2012, 14:12