Bad news for sugar stock

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Sugar stocks experienced declines on February 22 as the government declared an increase in the fair and remunerative price (FRP) of sugarcane to Rs 340 per quintal from Rs 315 for the 2024-25 season. This new price marks an approximate 8 percent rise compared to the rate set for the 2023-24 sugar season. The revised FRP will come into effect from October 1, 2024. According to a statement from the Centre, sugar mills will now be obligated to pay an FRP of Rs 340 per quintal of sugarcane at a recovery rate of 10.25 percent. Additionally, for every 0.1 percent increase in recovery, farmers will receive an extra Rs 3.32, while the same amount will be deducted for each 0.1 percent reduction in recovery. In contrast to other crops where the government sets the minimum support price (MSP), cane growers are provided with the FRP. This mechanism is regulated by the Sugarcane (Control) Order of 1966. The Commission of Agricultural Costs and Prices (CACP) formulates annual recommendations for FRP across various agricultural commodities, including sugarcane, which are then reviewed by the government before implementation.