As the second-largest sugar producer in the world looks to expand output, India plans to raise the floor price that mills must pay for sugarcane in the 2024–2025 season by 8%, a government source told Reuters on Wednesday.
The Fair and Remunerative Price (FRP), commonly known as the floor price for cane, is increased by the federal government virtually every year.
However, because Uttar Pradesh state has millions of cane growers, a powerful voting bloc, it raises the floor price further, making it the nation’s largest cane producer.
According to an anonymous source, New Delhi is thinking of raising the basic recovery percentage (FRP) of sugarcane from 315 rupees per 100 kg this year to 340 rupees per 100 kg for the following season. The source claimed that the suggestion is still being considered.
“For a few years now, sugar prices have remained constant. A top industry executive in Mumbai stated, “The proposed 8% increase is just too much, and mills can’t dish out that amount unless sugar prices go up.”
According to a prominent sugar producer who is a sugar miller headquartered in the western state of Maharashtra, the government may declare the FRP early this year to placate farmers ahead of the general elections. Normally, the FRP is established a few months before the start of the crushing season in October.
Due to insufficient rainfall this crop year, India’s sugar production is expected to fall short of consumption for the first time in seven years. Reduced plantings might potentially compel the world’s second-largest producer to import sugar the following year.
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