PRODUCTION and PRICING
Indian climate is highly conducive to sugarcane production, aided by low cost of input india has historically remained among top 2 sugarcane producers worldwide, swapping places with brazil almost regularly.
In india sugar industry was highly regulated from purchase from farmers to prices to be paid by mills who crush the sugarcane to eventually the sugar to be released in the market & the subsequent price. This was alright till demand was more than supply.
Post 2005, global demand for sugar fell, making government control illogical economically, but the politics forced government to continue supporting sugarcane farmers via. the Centre’s Fair and Remunerative Price (FRP) & State Advised Price (SAP) from state governments. State Advisory Price (SAP) IS offered only in the north indian states.
To offset the imbalance govt. in india is trying to divert some production to convert to ethanol for blending with petrol.
Uttar Pradesh was always the top producer of sugarcane among states & north india produced more than south india but at the turn of the millenium southern states took the lead because of above cited problems.
total sugarcane production in the five southern states has come down from 181.35 million tonnes (mt) to 130.65 mt during the 2011-2020 period while the production in the six northern states has increased from 161.7 mt to 222.51 mt. Above scenario was the outcome of introduction of (State Advised Price (SAP)
How is sugarcane pricing done in india?
Why the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the Fair and Remunerative Price (FRP)’ of sugarcane in 2009-10?
Initially sugarcane prices were controlled by sugarcane control order 1966, but inputs weather conditions, sustainability of operations for sugar mills, etc. made central government amend the same & Fair and Remunerative Price (FRP)’ of sugarcane was introduced in 2009-10.
What is Fair and Remunerative Price (FRP)?
Fair and Remunerative Price (FRP) is based on general input cost in farming, taking due care of basic sugar recovery rate in crushing of sugarcane.
The Cabinet Committee on Economic Affairs, approves Fair and Remunerative Price (FRP) for sugarcane.
Prices for 2022-23 (October - September) at ₹305 per quintal. The amount is for sugarcane with a basic sugar recovery rate of 10.25%. The Centre has also announced a premium of ₹3.05 per quintal for each 0.1% increase in recovery of sugar over and above 10.25% and reduction in FRP by ₹3.05 per quintal for every 0.1% decrease in recovery.
Who plans State Advised Price (SAP)?
State governments determine & announce SAP in consultation with industry for individual states. if SAP is announced then Fair and Remunerative Price (FRP) announced by centre will not apply to that state.