Government approves Fair and Remunerative Price of sugarcane payable by Sugar Mills to sugarcane farmers for sugar season 2022-23
Highest ever Fair and Remunerative Price of
Rs 305/qtl approved for Sugarcane Farmers (Ganna Kisan)
To increase income of farmers, Government has increased FRP by more than 34% in
past 8 years
Government of India is committed to improve economic condition of farmers
Decision will benefit 5 crore sugarcane farmers (Ganna Kisan) and their
dependents, as well as 5 lakh workers employed in the sugar mills and related
ancillary activities
Keeping in view interest of sugarcane farmers (Ganna Kisan), the Cabinet
Committee on Economic Affairs chaired by Prime Minister Narendra Modi has
approved Fair and Remunerative Price (FRP) of sugarcane for sugar season
2022-23 (October - September) at Rs. 305/qtl for a basic recovery rate of
10.25%, providing a premium of Rs. 3.05/qtl for each 0.1% increase in recovery
over and above 10.25%, & reduction in FRP by Rs. 3.05/qtl for every 0.1%
decrease in recovery. However, the Government with a view to protect interest
of sugarcane farmers has also decided that there shall not be any deduction in
case of sugar mills where recovery is below 9.5%. Such farmers will get Rs.
282.125/qtl for sugarcane in ensuing sugar season 2022-23 in place of Rs. 275.50/qtl
in current sugar season 2021-22.
The A2 + FL cost of production of sugarcane (i.e
actual paid out cost plus imputed value of family labour) for the sugar season
2022-23 is Rs. 162/qtl. This FRP of Rs. 305/qtl at a recovery rate of 10.25% is
higher by 88.3% over cost of production, thereby ensuring the promise of giving
the farmers a return of more than 50% over their cost. The FRP for sugar season
2022-23 is 2.6% higher than current sugar season 2021-22.
Due to proactive policies of Central Government, sugarcane cultivation
and sugar industry has come a long way in past 8 years and now reached a level
of self-sustainability. This is outcome of timely government interventions and
collaboration with sugar industry, State Governments, various departments of
Central Government as well as farmers. Salient measures taken by the Government
for Sugar Sector in recent years are as under:
·
FRP of sugarcane is fixed to ensure a guaranteed price to sugarcane
growers.
·
·
Government has increased FRP by more than 34% in past 8 years.
·
·
Government has also introduced the concept of Minimum Selling Price
(MSP) of sugar to prevent fall in ex-mill prices of sugar & accumulation of
cane arrears (MSP was fixed
·
initially at ₹ 29/ kg w.e.f 07-06-2018; revised to ₹ 31/kg
w.e.f. 14-02-2019).
·
·
Financial assistance of more than ₹ 18,000 crore extended to sugar mills
to facilitate export of sugar, for maintaining buffer stocks, to augment
ethanol production capacity & for clearance of farmers’ dues.
·
·
Diversion of surplus sugar for production of ethanol led to improved
financial conditions of sugar mills. As a result, they are able to clear cane
dues early.
·
·
Due to exports and diversion of sugar to ethanol, sugar sector has
become self-sustainable and budgetary support for export and buffer are not
required to improve liquidity of mills.
Further, due to various others measures taken for
the Sugar Sector during past few sugar seasons which inter-alia included
introduction of high yielding varieties of sugarcane, adoption of drip
irrigation system, modernization of sugar plant and other R&D activities,
the area of sugarcane cultivation, production of sugarcane, cane crushed, sugar
production & its recovery percentage and the payment to farmers have
increased considerably.
Government committed to increase income of farmers:
Decision will benefit 5 crore sugarcane farmers (Ganna Kisan) and their
dependents, as well as 5 lakh workers employed in the sugar mills and related
ancillary activities. 9 years back, FRP was only Rs. 210/ qtl in sugar season
2013-14 & only about 2397 LMT of sugarcane was purchased by sugar mills.
Farmers were getting only about Rs. 51,000 cr from sale of
sugarcane to sugar mills. However, in past 8 years Government has
increased FRP by more than 34%. In the current sugar season 2021-22,
about 3,530 lakh tons of sugarcane of worth Rs. 1,15,196 cr was purchased
by sugar mills, which is at all time high.
Keeping the
increase in the acreage & expected production of sugarcane in the ensuing
sugar season 2022-23, more than 3,600 lakh tons of sugarcane is likely to be
purchased by sugar mills for which the total remittance to the sugarcane
farmers is expected to be more than Rs. 1,20,000 crore. The Government
through its pro-farmer measures will ensure that sugarcane farmers get their
dues in time.
In the previous
sugar season 2020-21, about Rs. 92,938 crores cane dues were payable, out of
which Rs. 92,710 crore has been paid & only Rs. 228 crore arrears are
pending. In the current sugar season 2021-22, out of cane dues payable of Rs.
1,15,196 crores about Rs. 1,05,322 crores cane dues have been paid to farmers,
as on 01.08.2022; thus, 91.42% cane dues have been cleared which is higher than
earlier seasons.
India - largest producer & second largest exporter of sugar in the
world:
India has surpassed Brazil in the sugar production in the current sugar
season. With the increase in the production of sugar in past 8 years, India
apart from meeting its requirement for domestic consumption has also
consistently exporting sugar which has helped in reducing our fiscal
deficit. In last 4 sugar seasons 2017-18, 2018-19, 2019-20 & 2020-21,
about 6 Lakh Metric Tonne (LMT), 38 LMT, 59.60 LMT & 70 LMT of sugar has
been exported. About 100 LMT of sugar has been exported till 01.08.2022 in the
current sugar season 2021-22 & exports likely to touch 112 LMT.
Sugarcane farmers & sugar industry now contributing in energy
sector:
India’s 85% requirement of crude oil is met through imports. But with a
view to reduce import bill on crude oil, to reduce pollution & to make
India Atmanirbhar in petroleum sector, Government is pro-actively moving ahead
to increase production & blending of ethanol with petrol under the Ethanol
Blended with Petrol programme. Government is encouraging sugar mills to divert
excess sugarcane to ethanol which is blended with petrol, which not only serves
as a green fuel but also saves foreign exchange on account of crude oil import.
In sugar seasons 2018-19, 2019-20 & 2020-21, about 3.37 LMT, 9.26 LMT &
22 LMT of sugar has been diverted to ethanol. In current sugar season 2021-22,
about 35 LMT of sugar is estimated to be diverted & by 2025-26 more than 60
LMT of sugar is targeted to be diverted to ethanol, which would address the
problem of excess sugarcane as well as delayed payment issue because farmers
would get timely payment.
Government has fixed
target of 10% blending of fuel grade ethanol with petrol by 2022 & 20%
blending by 2025.
Till year 2014,
ethanol distillation capacity of molasses based distilleries was only about 215
cr litres. However, in past 8 years due to the policy changes made by the
Government, the capacity of molasses based distilleries have increased to 595
cr litres. Capacity of grain based distilleries which were about 206 cr litres
in 2014 have now increased to 298 cr ltrs. Thus, the overall capacity of
ethanol production has doubled in past 8 years from 421 cr ltrs in 2014 to 893
cr ltrs in July’ 2022. Government is also extending interest subvention to
sugar mills/ distilleries for loans availed from banks for augmentation of
ethanol production capacities. About 41,000 cr investment is being made in
ethanol sector which will create employment opportunities in rural areas.
In ethanol supply year (ESY) 2013-14, supply of ethanol to OMCs was only
38 crore litres with blending levels of only 1.53 %. Production of fuel grade
ethanol and its supply to OMCs has increased by 8 times from 2013-14. In
ethanol supply year 2020-21 (December - November), about 302.30 cr ltrs of
ethanol has been supplied to OMCs thereby, achieving 8.1% blending levels. In
the current ESY 2021-22, we have been able to achieve 10.17% blending levels.
More than 400 cr ltrs of ethanol likely to be supplied by sugar mills/
distilleries for blending with petrol in the current ESY 2021-22 which will be
10 times in comparison to supplies in year 2013-14.
Sugar industry
becoming self-sustainable:
Earlier, sugar
mills were dependent primarily on sale of sugar to generate revenues. Surplus
production in any season adversely affects their liquidity leading to
accumulation of cane price arrears of farmers. Government interventions were
made from time to time to improve their liquidity. However, in past few years
due to Central Government’s proactive policies including encouragement to
export surplus sugar & to divert sugar to ethanol, the sugar industry has
now become self-sustainable.
Since, 2013-14 about
Rs. 49,000 crore revenue generated by sugar mills from sale of ethanol to Oil
Marketing Companies (OMCs). In the current sugar season 2021-22, about Rs.
20,000 cr revenue is being generated by sugar mills from sale of ethanol to
OMCs; which has improved liquidity of sugar mills enabling them to clear cane
dues of farmers. Revenue from sale of sugar & its by-products, ethanol
supplies to OMCs, power production from bagasse based cogeneration plants &
sale of potash produced from press mud has improved topline & bottom line
growth of sugar mills.
The measures taken by
the Central Government and FRP enhancement have encouraged farmers to cultivate
sugarcane and facilitated continued operation of sugar factories for domestic
manufacturing of sugar. Due to proactive policies made by the Government
for sugar sector, India is also now becoming atmanirbhar in energy
sector.