Government Increases FRP to Rs 340/Quintal, But Sugar Stocks Fall at Renuka Sugar, Balarampur Chini

On February 22, sugar stockpiles saw a decline after the government’s announcement that the fair and remunerative price (FRP) of sugarcane would increase to Rs 340 per quintal from Rs 315 for the 2024–25 season. Major sugar producer Balrampur Chini’s share price fell sharply on Thursday, starting the day at Rs 375 a share on the NSE and reaching an intraday low of Rs 372 minutes after the opening bell. This is a roughly 2.50% decline.

The share price of Shree Renuka Sugars began trading at Rs 50 per share and fell as low as Rs 47.85 throughout the day, representing a roughly 3% decline from the company’s Wednesday closing price of Rs 49.60 per share.

During Thursday morning trade, shares of Dwarikesh Sugar, Rana Sugars, Dalmia Bharat, Triveni Engineering and Industries, KCP Sugar and Industries Corporation, Mawana Sugars, etc., were also subject to sell-off pressure and had an intraday loss of more than 1%, putting them in the red.

KM Sugar Mills Ltd. (down 2.89 per cent), Mawana Sugars Ltd. (down 2.83 per cent), Sakthi Sugars Ltd. (down 2.45 per cent), Uttam Sugar Mills Ltd. (down 2.37 per cent), Ugar Sugar Works Ltd. (down 2.23 per cent), and KCP Sugar & Industries Corporation Ltd. (down 2.04 per cent) were among the top losers. Simbhaoli Sugars Ltd. (down 5.59 per cent), Vishwaraj Sugar Industries Ltd. (down 4.18 percent), Bajaj Hindusthan Sugar Ltd. (down 3.13 per cent), Rana Sugars Ltd. (down 3.06 per cent), and Sakthi Sugars Ltd. (down 2.45 per cent) were among the top losers.

The only companies to see growth were DCM Shriram Industries Ltd. (up 1.87%) and Magadh Sugar & Energy Ltd. (up 0.50%).

“Sugar mills will pay FRP of sugarcane at Rs 340/quintal at recovery of 10.25 percent with this approval.” Farmers will get an extra Rs 3.32 for every 0.1 percent gain in recovery, while the same amount would be withheld for every 0.1 percent decrease in recovery, according to a statement from the Center.

Cane producers get FRP, while the government sets the MSP for other crops. The Sugarcane (Control) Order of 1966 regulates the system. Every year, recommendations for FRP are made by the Commission of Agricultural Costs and Prices (CACP) for a variety of agricultural products, including sugarcane. Before implementing these suggestions, the government assesses them.

Lower rainfall this year has resulted in fewer sugarcane plantations, which is projected to produce a decline in total sugar output in 2023–24, according to the industry.

The new FRP, which is 107% more than the A2+FL cost of sugarcane, will guarantee the financial success of sugarcane growers. It is interesting to note that, despite paying the highest price in the world for sugarcane, India’s government guarantees that home Bharat customers would get the lowest sugar available worldwide. The Central Government’s decision would help lakhs of other people working in the sugar industry as well as over 5 crore sugarcane growers (including family members). It reaffirms that Modi ki Promise to quadruple farmers’ income has been fulfilled.

With this decision, sugar mills would reimburse 10.25 percent of the FRP of sugarcane, valued at Rs 340 per quintal. Farmers would get an extra price of Rs 3.32 for every 0.1 percent gain in recovery, but the same amount will be withheld in the event of a 0.1 percent decrease in recovery. The minimum price of sugarcane, which is at a 9.5% recovery, is Rs 315.10/quintal. FRP at Rs 315.10/quintal is guaranteed to farmers, even in the event of a lower sugar recovery.