The Cabinet on Tuesday raised the minimum amount that mills are legally bound to pay growers by ₹10 per quintal, the lowest in three years. After this revision, sugar mills will buy sugarcane at the new Fair and Remunerative Price (FRP) of ₹365 per quintal when they open the factories for 2026-27 season from October.
“The FRP will be ₹365/quintal for a basic recovery rate of 10.25 per cent,” Union Minister Ashwini Vaishnaw told reporters after the Cabinet Committee on Economic Affairs (CCEA) meeting. The approved FRP is 2.81 per cent higher than the current rate of ₹355 per quintal for 2025-26 season. In 2023-24 season, too, the government had hiked FRP by ₹10 per quintal.
For every 0.1 per cent increase in recovery above 10.25 per cent, the FRP will rise by ₹3.56 per quintal, incentivising higher sugar recovery by mills, the minister said. With a view to protecting the interests of farmers supplying cane to mills with recovery below 9.5 per cent, the government has decided that there will be no deduction in FRP in such cases and farmers will receive minimum ₹338.3 per quintal, he said.
Production cost
While the production cost of sugarcane for 2026-27 has been pegged at ₹182 per quintal, the FRP fixed is 100.5 per cent higher than the production cost (A2+FL formula), the government said. The decision is expected to benefit nearly one crore sugarcane farmers, support farm labourers engaged in sugarcane cultivation and ensure the continued operation of sugar factories, Vaishnaw said.
The FRP has been fixed on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consultation with state governments and other stakeholders.
In the current 2025-26 season, out of dues ₹1,12,740 crore, about ₹99,961 crore, or 88.6 per cent, has been paid to farmers, he informed.
While the sugar industry has welcomed the decision, farmers have said the hike is inadequate.
Indian Sugar and Bio-energy Manufacturers Association (ISMA) termed it progressive and farmer-friendly step and said it reflects the government’s continued commitment to strengthening farmer welfare and enhancing rural prosperity.
“It is estimated that this increase will result in an additional income of over ₹15,000-20,000 crore, taking total cane payments to around ₹1.3 lakh crore in the upcoming season. This will provide a strong impetus to rural demand and reinforce the agricultural economy, particularly in regions where sugarcane cultivation is a primary livelihood,” ISMA said in a statement.
Stressing on its long-pending demand to raise the Minimum Selling Price (MSP) of sugar, ISMA said that while the FRP increase rightly supports farmers, it also raises the cost of raw material for mills. “A proportionate revision in sugar MSP and ethanol procurement prices would enable mills to absorb these higher costs without financial strain, thereby maintaining operational stability and ensuring timely cane payments to farmers,” it said.
On the other hand, Dharmendra Malik, spokesperson of Bharatiya Kisan Union (apolitical) said that a mere increase of ₹10 per quintal is a formality and this is unjust.
He stated that the costs associated with farming — including diesel, fertilizers, labour wages, irrigation, and transportation — are constantly on the rise; in such a scenario, this meagre increase proves to be negligible when weighed against the actual cost of production.
When determining the price of sugarcane, the basis for calculation should not be a mere token increase, but rather a scientific formula comprising the total cost of production (C2 cost) plus a 50 per cent profit margin. Until farmers receive a just and equitable price for their produce, the claim that “agriculture is a profitable enterprise” will remain confined merely to paper, he added.
Published on May 5, 2026