The Central government has hiked the minimum price that sugar mills must pay to cane farmers by ₹5 a quintal for the 2021-22 sugar season that runs from October to September. In a decision taken by the Cabinet on Wednesday, the new fair and remunerative price (FRP) has been set at ₹290 a quintal.
“The decision will benefit five crore sugarcane farmers and their dependents as well as five lakh workers employed by sugar mills and related industries,” said Food Minister Piyush Goyal, at a press conference after the meeting. This was the highest ever FRP so far, he noted. The Centre had hiked FRPs by 38% since the ₹210 a quintal rate of 2013-14. He pointed out that this year’s hike was only half of the ₹10 increase seen last year.
Mr. Goyal said that ₹91,000 crore was being paid to the sugarcane farmers in the current sugar season. The payout for 2021-2022 was expected to cross ₹1 lakh.
Asked about the arrears to the cane farmers in Uttar Pradesh, the largest sugar producing State, he stated that the State had managed to clear all pending dues till 2019-20. It had paid out ₹27,000 crore for the current season until August 14.
Late payment of dues was a thorny political issue in western U.P., with many of the farmers protesting on Delhi’s border at Ghazipur under the banners of the Bharatiya Kisan Union-Tikait and the Samyukt Kisan Morcha being drawn from this region.
Most major sugar-producing States set their own cane prices, over and above the national FRP, and a sore point for U.P. farmers had been that the State had not hiked its price of ₹315 a quintal for the last three years. Over the last week, Punjab’s cane farmers took to the streets, agitating for an increase in the State price and negotiated a ₹50 a quintal hike to ₹360.
On Wednesday morning, Congress leader Priyanka Gandhi Vadra took to Twitter to accuse the U.P. government of failing to match up. “The Congress government of Punjab listened to the farmers and raised the price of sugarcane to ₹360/quintal. The U.P. BJP government, which came with a promise of ₹400/quintal for sugarcane, has not raised a single penny on the price of sugarcane for 3 years and threatens to “see” if farmers raise their voices,” she tweeted.
Sugar mills welcomed the decision as “quite reasonable”, but demanded that the minimum selling prices also be hiked. “It is not a major increase, as compared to the past, when the government had in a couple of years increased the FRP by ₹25 to 40/quintal of cane,” said a statement from Abinash Varma, director general of the Indian Sugar Mills Association.
“Now that the FRP is increased, the industry would expect that the Government will increase the Minimum Selling Price [MSP] of sugar too. It will be necessary to help sugar mills accommodate the higher cane price payment to farmers in the current as also the next season. The MSP of sugar has remained static for over 30 months, even though the cane FRP was increased by Rs.10/quintal in 2020-21 SS,” he added, seeking an MSP of ₹34.50-35/kg.
MSP increase issue
However, Mr. Goyal made it clear the Centre had no intention of increasing the MSP at this time, arguing that the mills received governmental support for exports as well as to divert surplus sugar to ethanol production.
“The delicate balance of the interest of farmers and consumers, as well as the industry, has been maintained in this decision,” he added.