Sugar mills in Uttar Pradesh are increasingly preferring Fair and Remunerative Price (FRP) for payment, rather than State Advised Price (SAP). SAPs have traditionally been much higher than FRPs, which have increased losses for the sugar mills. FRPs and SAPs are the rates at which mills pay the sugarcane farmers for the raw materials.
For the current sugar season in Uttar Pradesh, the Fair and Remunerative Price of sugar (FRP) is Rs 275 per quintal at a 10 per cent recovery rate for sugar mills. This FRP goes up by 1 per cent for every 0.1 per cent hike in recovery rates. For the next sugar season, a new FRP of Rs 285 has been announced. So, if the recovery rate is 11 per cent, the FRP works out to Rs 313.50. At a recovery level of 11.25 per cent, the FRP is Rs 320.65. The current State Advised Price (SAP) in Uttar Pradesh is Rs 320 per quintal, reports Financial Express.
So, if the SAP is not increased for the next season, and there is no indication right now that it will be raised, particularly since there are no elections, the SAP is better for mills that have a recovery rate of over 11.25 per cent, reports Financial Express. While the SAP is a fixed amount, the FRP is based on the recovery rate, or the amount of sugar that mills are able to extract from sugarcane. In the past, the SAP was raised regularly, often by large amounts.
Thanks to the introduction of better quality of cane – the Co-0238 variety – recovery rates in the state have been rising steadily. While the average recovery of UP sugar mills in 2019-20 season was 11.30 per cent, the better ones like Balrampur Chini’s Maijapur factory had a recovery as high as 12.54 per cent, the highest in the state, while Bahadurpur and Faridpur factories of Dwarikesh Sugar had recoveries of 12.42 per cent and 12.39 per cent, respectively, claims the Financial Express report.
Of the 119 sugar mills in the state, as many as 43, both cooperative and private included, have recoveries above 11.5 per cent; 13 have recoveries above 12 per cent. In terms of their production, a little more than half of UP’s cane production is crushed in mills that prefer the SAP, that is those that have a recovery rate of more than 11.25 per cent.