Sugar Minister E Peddi Reddy said the government took the decision after holding discussions with the cane growers representatives and management of sugar factories, and after taking into consideration sugar production in the state and the need to give remunerative price to the farmers, besides sustaining the sugar industry.

He said in addition to this, Rs 20 per mt would be passed on to the farmers out of purchase tax due to the government. Incentives would also be paid by the sugar factories depending upon the profitability of the individual factories. On an average, the sugarcane farmer in Andhra Pradesh would get Rs 875-900 per tonne, he added.

Mr Reddy said production of sugarcane in the country was 182 lakh tonne in 1999-2000 compared to 168.70 lakh tonne in the previous season. The estimated production in 2000-2001 was 187 lakh tonne. The carryover stock was 103.20 lakh tonne from the previous season compared to the closing stock of 66.70 lakh tonne in the previous year. He said in Andhra Pradesh 117.17 lakh tonne of sugarcane was crushed in 1999-2000 as against 114.77 lakh tonne in the previous year. Sugar production increased from 11.10 lakh tonne in 1998-99 to 11.82 lakh tonne in 1999-2000. Recovery for the state increased from 9.7 per cent to 10.9 per cent in 1999-2000. There was a carryover stock of 5.63 lakh tonne in the state as against 4.49 lakh tonne in the previous year. The levy price for the state was Rs 1189.39 per quintal. Open market price in the state was around Rs 1300 but during November, it was reduced to Rs 1250 - Rs 1290 per quintal.