The cabinet committee on economic affairs (CCEA), which met in the capital, also decided to increase the statutory minimum price (SMP) of sugarcane by 8 per cent, for the coming season. The benchmark price of RSS-4 grade natural rubber has been revised to Rs 3,405 per quintal and of RSS-5 grade to Rs 3,355 per quintal. The cabinet also revised the minimum buffer stocks norms of foodgrains by 10 per cent to ensure food security.

The decision to reimpose price control on DAP and MOP is aimed at keeping prices under check in view of the hardships faced by farmers owing to floods, drought and cyclone in different parts of the country.

Minister of state for agriculture Som Pal told reporters that the decision will result in additional subsidy burden of Rs 350 crore to the exchequer. The government hadincreased the subsidy on the DAP/potash fertilisers recently.

The decision will help the government maintain the existing price level of DAP and potash fertilisers, which could have risen owing to sharp variation in the exchange rate of dollar vis-a-vis rupee, he said.

For sugarcane, CCEA raised the SMP to Rs 52.70 per quintal linked to a basic recovery of 8.5 per cent. The SMP is also subjected to a proportionate premium of Rs 0.62 for every 0.1 per cent increase in the recovery above the level of 8.5 per cent.

In the previous year the SMP for cane was Rs 48.45 per quintal linked to a basic recovery of 8.5 per cent and subjected to a progressive premium of Rs 0.60 for every 0.1 per cent increase in the recovery above the stated level.

The sugar industry, particularly the cooperatives, was demanding that the SMP be subjected to a progressive premium for every 0.1 per cent increase in the stated recovery level as this will encourage farmers to grow canes with more sucrose content. The farmers, in thisprocess, will be induced to go for balanced fertiliser use of NPK instead of giving more stress on urea consumption.