The government has decided to hike the Fair and Remunerative Price (FRP) of sugarcane by Rs 20 per quintal today. The increased FRP is Rs 275 per quintal and the decision was taken today by Cabinet Committee on Economic Affairs (CCEA), the Hindu Business Line has reported.

The price will be applicable from the next marketing year which will begin from October. The decision was taken after the Commission for Agricultural Costs and Prices (CACP) recommended an increase of Rs 20 per quintal.

FRP is the minimum price sugar mills have to pay for the sugarcane farmers.

FRP fixed by the Centre need not be mandatorily followed by the states. States like Uttar Pradesh, Punjab and Haryana fix their own prices called State Advisory Prices (SAP), which is slightly higher than the FRP announced by the centre. Therefore, now even states may increase SAPs following the hike in FRP.

The FRP for sugarcane is now linked at basic recovery rate of 9.5 per cent. The farmers will get Rs 2.68 more per quintal for every 0.1 per cent in the recovery rate.

As India has been receiving normal rainfall this year, sugarcane output is expected to rise. Due to this, sugar production is expected to increase by 10 per cent in the next marketing year. India is the second largest producer of sugar in the world after Brazil.

The Centre had recently increased the prices of ethanol which is extracted while producing sugar. It was done to benefit the mill owners, who in turn could pay their dues to the sugarcane farmers.

Recently, sugar mill owners in Tamil Nadu had sought assistance of the state government to overcome sugarcane shortfall. They demanded that the government should pay a price of Rs 300 a tonne to the farmers.