In a significant move aimed at supporting sugarcane farmers in India, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval for the Fair and Remunerative Price (FRP) of sugarcane for the upcoming sugar season 2023-24, which spans from October to September.
The approved FRP stands at Rs. 315 per quintal for a basic recovery rate of 10.25%. Additionally, a premium of Rs. 3.07 per quintal will be provided for every 0.1% increase in recovery above 10.25%, while the FRP will be reduced by Rs. 3.07 per quintal for every 0.1% decrease in recovery.
To safeguard the interests of sugarcane farmers, the government has decided against making any deductions for sugar mills where the recovery rate falls below 9.5%. In such cases, farmers will receive Rs. 291.975 per quintal for their sugarcane in the upcoming sugar season 2023-24, compared to Rs. 282.125 per quintal in the current sugar season 2022-23. The cost of production for sugarcane in the sugar season 2023-24 has been estimated at Rs. 157 per quintal. The approved FRP of Rs. 315 per quintal, based on a recovery rate of 10.25%, is 100.6% higher than the production cost. Furthermore, the FRP for the sugar season 2023-24 is 3.28% higher than the FRP in the current sugar season 2022-23.
The approved FRP will be applicable for the purchase of sugarcane from farmers by sugar mills during the sugar season 2023-24, commencing on October 1, 2023. The sugar sector plays a crucial role in the livelihoods of approximately 5 crore sugarcane farmers and their dependents, as well as around 5 lakh workers directly employed in sugar mills. Additionally, numerous individuals are employed in ancillary activities, including farm labor and transportation, associated with the sugar sector.
The determination of the FRP has been based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consultations with state governments and other stakeholders. The government has been announcing the FRP for each sugar season since 2013-14.
Providing some background, in the current sugar season 2022-23, sugar mills purchased approximately 3,353 lakh tons of sugarcane worth Rs. 1,11,366 crore, making it the second-highest procurement after paddy crop at the Minimum Support Price. The government, through its pro-farmer measures, aims to ensure that sugarcane farmers receive their dues in a timely manner.
Over the past five years, the growth of the ethanol sector as a biofuel has greatly supported sugarcane farmers and the sugar sector. The diversion of sugarcane and sugar to ethanol has led to improved financial positions for sugar mills, resulting in faster payments, reduced working capital requirements, and less surplus sugar, which, in turn, has enabled timely payment of cane dues to farmers. In the 2021-22 period, sugar mills and distilleries generated approximately Rs. 20,500 crore in revenue from the sale of ethanol to oil marketing companies (OMCs), facilitating the clearing of cane dues owed to farmers.
The Ethanol Blended with Petrol (EBP) Program has not only saved foreign exchange and enhanced energy security but has also reduced dependence on imported fossil fuels, aligning with the goal of an Atmanirbhar Bharat (self-reliant India) in the petroleum sector. The target is to divert more than 60 LMT (Lakh Metric Tons) of excess sugar to ethanol by 2025, which would address the issue of high sugar inventories, improve liquidity for mills, ensure timely payment of cane dues to farmers, and create employment opportunities in rural areas. The use of ethanol blended with petrol will contribute to reduced pollution and improved air quality.
The proactive and farmer-friendly policies implemented by the government have not only promoted the interests of farmers, consumers, and workers in the sugar sector but have also improved the livelihoods of over 5 crore individuals directly and made sugar more affordable for consumers. As a result of these proactive policies, the sugar sector in India has become self-sustainable.
India now plays a crucial role in the global sugar economy, serving as the second-largest exporter of sugar worldwide. In the sugar season 2021-22, India also became the largest producer of sugar. It is expected that by 2025-26, India will become the third-largest ethanol-producing country globally.
