A farmer works in his sugarcane field on the outskirts of Ahmedabad, India February 28, 2015.
Credit: Reuters File Photo
New Delhi: India is planning an increase of 8 per cent for the floor price that mills must pay for sugarcane in the 2024/25 season from Oct. 1, a government source told Reuters on Wednesday, as the world's second-largest sugar producer tries to boost output.
The federal government raises the floor price for cane, also known as Fair And Remunerative Price (FRP), almost every year.
But Uttar Pradesh, the country's top cane producer, invariably raises the floor price further due to its millions of cane growers, an influential voting bloc.
New Delhi is considering fixing the FRP of sugar cane at Rs 340 per 100 kg for next season, up from this year's Rs 315 for a basic recovery rate of 10.25 per cent, the source said, who declined to be named since the proposal is under consideration.
"Sugar prices have stayed the same for a few years now. The proposed 8% increase is just too much, and mills can't really dish out that amount unless sugar prices go up," said a senior Mumbai-based industry official.
The government usually sets the FRP a few months before the start of crushing season in October, but this year it might announce it earlier to appease farmers before the general elections, said a sugar miller based in western state of Maharashtra, a leading sugar producer.
India's sugar output this crop year, hit by weak rains, is set to lag consumption for the first time in seven years, and lower plantings may even force the world's No.2 producer to import in the following year.