Sugar price rise 'inevitable' due to sugarcane FRP hike: NFCSF

Sugar prices have increased this year due to estimated fall in production of the sweetener at about 20 million tonnes in the 2016-17

The Dollar Business Bureau

With an 11% hike in the fair and remunerative price (FRP) of sugarcane, there could be a rise in the retail prices of sugar, industry body National Federation of Cooperative Sugar Factories (NFCSF) said. As per official data presently sugar’s retail prices are at Rs 40-45 per kg.

In its public release on Wednesday the government stated that “The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for fixing the Fair and Remunerative Price (FRP) of sugarcane at Rs. 255/- per quintal (qt) for sugar season 2017-18 linked to a basic recovery rate of 9.5% subject to a premium of Rs. 2.68 per quintal for every 0.1% point increase in recovery above that level. The approved FRP reflects an increase of 10.87% over the FRP of sugar season 2016-17. The FRP so approved shall be applicable for purchase of sugarcane from the farmers in the sugar season 2017-18 by the sugar mills. The move is a reflection of the Government’s pro-farmer initiatives, keeping in mind the interest of sugarcane farmers and importance of the sugar industry.”

The NFCSF which represents cooperative sugar mills welcomed the government’s decision to hike the sugarcane FRP but cautioned with regard to its impact on the retail prices in the coming days. The sugar industry is an important agro-based industry that has a direct bearing on about 50 million sugarcane farmers and around 5 lakh workers working in these units or those related to the ancillary sugar industry.

 "This rise in raw material (prices) is bound to push up the cost of production of sugar and thereby retail price of sugar may show an increase in coming days," NFCSF MD Prakash Naiknavare said in a statement.

But this is fair enough as the farmers would get the ‘remunerative price commensurate with their expenses in growing sugarcane’ he stressed. "This alone will encourage them to continue growing sugarcane which will help the industry sustain".

He also said that checks and measures have already been put in place by States like Karnataka, Gujarat and Maharashtra by appointing cane price fixation boards as specified by the Rangarajan Committee.

With the increase in sugarcane FRP the selling price of not only sugar, but its byproducts namely bagasse, press-mud and value-added products like ethanol, and co-generation also need to be at a reasonable high level, he noted. "This inevitable fact also needs to be recognised, understood and appreciated by all the stakeholders... and the government for ensuring a healthy sugar sector," he noted.

Sugar prices have increased this year due to estimated fall in production of the sweetener at about 20 million tonnes in the 2016-17 season, from 25 million tonnes in the previous year.

The Dollar Business Bureau - May 26, 2017 12:00 IST