Sugar Stocks Sour as Government Raises Sugarcane Prices for 2024-25 Season

22 Feb 2024 , 12:20 PM

Sugar stocks experienced a decline on February 22 after the government announced an increase in the fair and remunerative price (FRP) of sugarcane for the 2024-25 season, from ₹315 to ₹340 per quintal.

The revised FRP, effective from October 1, 2024, represents an 8% rise compared to the rate for the 2023-24 sugar season.

Balrampur Chini Mills traded at ₹377, down more than 1% at 9:20 am, along with EID Parry and Shree Renuka Sugars also showing downward trends. Other losers included Dalmia Bharat Sugar, Dhampur Sugar Mills, and Triveni Engineering.

According to the government statement, sugar mills will pay the FRP of sugarcane at ₹340/quintal with a recovery rate of 10.25%. Farmers will receive an additional ₹3.32 for every 0.1% increase in recovery, and the same amount will be deducted for a reduction in recovery by 0.1%.

Unlike other crops where the government sets the Minimum Support Price (MSP), sugarcane growers are offered FRP, regulated by the Sugarcane (Control) Order of 1966. The Commission of Agricultural Costs and Prices (CACP) annually formulates FRP recommendations for various agricultural commodities, including sugarcane.

The industry predicts a decrease in overall sugar production in 2023-24 due to lower rainfall, leading to reduced sugarcane plantation. The All India Sugar Trade Association (AISTA) estimates sugar production at 316 lakh tonnes this year, compared to 329 lakh tonnes in 2022-23.

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