Are Sugarcane Margins Reasonable in Maharashtra? An Economic Analysis of Costs, Returns and Crop Alternatives Using CACP Cost Concepts

Sugarcane is a major commercial crop in Maharashtra and plays a pivotal role in the rural economy and agro-processing sector of the state. The crop is cultivated under administered pricing through the Fair and Remunerative Price (FRP) mechanism, with the objective of ensuring remunerative returns to growers. However, rising costs of cultivation, increasing water scarcity, yield variability, recovery-linked pricing and persistent delays in payment by sugar factories have raised concerns about the adequacy of margins realized by sugarcane farmers. Using secondary data from the Commission for Agricultural Costs and Prices (CACP) and other official sources, this paper examines the economic viability of sugarcane cultivation in Maharashtra by analyzing costs and returns under alternative cost concepts (A2, A2+FL and C2). The study further compares returns from sugarcane with selected alternative cropping systems and cash crops. The results indicate that although sugarcane generates high gross returns, net margins over comprehensive cost are modest and fall short of the remunerative benchmark of C2 plus 50 per cent recommended by the National Farmers’ Commission. Nevertheless, sugarcane continues to dominate cropping patterns due to its relative income advantage over competing field crops and institutional factors. The paper highlights the need for pricing reform, timely payment enforcement and promotion of crop diversification to improve farm income and sustainability.