Cabinet Committee on Economic Affairs Current Affairs - 2020

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Govt approves creation of buffer stock for 40 lakh MT of sugar for 1 yr

Cabinet Committee on Economic Affairs (CCEA) has approved creation of a buffer stock of 40 lakh metric tonnes (LMT) of sugar. This buffer stock would be created for one year starting from 1 August 2019 to 31 July 2020. The decision of approving a buffer stock is to maintain demand-supply balance and to stabilise sugar prices.

Key Highlights

Estimated Cost & Review: Government will spend an estimated Rs.1674 crore for creation of a buffer stock of 40 LMT. However, based on market price and availability of sugar, this may be reviewed by Department of Food and Public Distribution under Union Ministry of Consumer Affairs, Food and Public Distribution any time for withdrawal or modification.

Reimbursement: provided under scheme would be met on a quarterly basis (3 months) to sugar mills. It would be directly credited into farmers’ account on behalf of mills against cane price dues. In case of any subsequent balance, it would be credited to mill’s account.

Benefits: The decisions will lead to:

  • Reduction in sugar inventories
  • Improvement in liquidity positions of sugar mills
  • Stabilization in sugar prices by alleviating of price sentiments in domestic sugar market. This will further facilitate timely clearance of cane price dues of farmers.
  • Benefits for sugar mills in all sugarcane producing States, by way of clearing sugarcane price dues of sugar mills.

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CCEA keeps Fair and Remunerative Price of sugarcane at Rs275/quintal

Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the proposal for Determination of Fair and Remunerative Price (FRP) of sugarcane payable by sugar mills for 2019-20 sugar season.

Key Highlights

CCEA kept FRP at Rs 275 per quintal the same as last year (2018-19) for sugarcane sold to mills during forthcoming sugar season of 2019-20, much to distress of sugarcane growers.

FRP is based on recommendation of Commission of Agricultural Costs & Prices (CACP) as per its August 2018 report on- Price Policy for Sugarcane for 2019-20 season.

CCEA also approved to provide a premium of Rs.2.75 per quintal for every 0.1% increase above 10% in recovery.

Price of sugarcane is fixed by Centre/State, while price of sugar is market determined.

What is Fair and Remunerative Price?

It is the minimum price at which rate sugarcane is to be purchased by sugar mills from farmers. FRP is fixed by Union government on basis of recommendations of Commission for Agricultural Costs and Prices (CACP), an attached office of Union Ministry of Agriculture & Farmers Welfare.

Factors: Recommended FRP is achieved by taking into account various factors such as cost of production, demand-supply situation, inter-crop price parity, domestic & international prices etc.

Sugarcane’s FRP is determined under Sugarcane (Control) Order, 1966 which will be uniformly applicable all over country. Besides FRP, some states like Punjab, Haryana, Uttarakhand, Uttar Pradesh and Tamil Nadu announce a State Advised Price, which is generally higher than the FRP.

Significance: FRP approval will ensure a guaranteed price to cane growers. It also assures margins to farmers, irrespective of whether sugar mills generate a profit or not as FRP determination is in interest of sugarcane growers keeping in view their entitlement to FRP for their produce.

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