Tamil Nadu sanctions Rs 603 crore cane incentive, lifting price to Rs 4,000 a tonne

The Tamil Nadu government has sanctioned Rs 603.34 crore from its own funds as a special incentive for sugarcane farmers who supplied cane to sugar mills in the 2025-26 crushing season, according to a government order reported on Thursday, October 8, 2026. Eligible farmers will receive Rs 709.50 per tonne on top of the Centre's fair and remunerative price (FRP) of Rs 3,290.50 per tonne, which takes their total to Rs 4,000 per tonne at a sugar recovery rate of 9.5 per cent. The money will be paid directly into farmers' bank accounts, and the payments are timed for the Deepavali festival season. Reports put the number of beneficiaries at about 90,000 farmers.

Sugarcane is one of Tamil Nadu's main cash crops, and its price is a long-running issue for growers. The Centre sets the FRP, the minimum price that mills must pay. States can add their own top-up. Farmers' groups in Tamil Nadu have for years asked for a total price of Rs 4,000 a tonne, and this order delivers that figure for cane at the standard recovery level.

The incentive matters because cane is costly to grow. It occupies the field for most of a year, needs a lot of water and labour, and farmers wait for mills to pay after crushing. A top-up of about Rs 700 a tonne is a substantial addition to what mills pay, and it is being paid by the state, not by the mills.

The timing also matters for the rural economy. Money paid into farmers' accounts before Deepavali is likely to be spent quickly on household needs, festival purchases, loan repayments and the next crop. That spending reaches local traders, input dealers and small businesses in cane-growing districts.

For the sugar industry, a better price helps keep farmers growing cane and supplying local mills, rather than shifting to other crops. Steady cane supply is what keeps a mill's crushing season long enough to be viable.

Short-term: About 90,000 cane growers should see the incentive credited to their bank accounts around Deepavali, after district committees verify their supply records.

Long-term: A reliable state top-up can encourage farmers to keep growing cane for local mills, supporting mill operations and rural jobs, though it also adds to the state's spending each year it is paid.

Who is affected: Sugarcane farmers who supplied mills in 2025-26, cooperative and private sugar mills in Tamil Nadu, rural traders and input suppliers in cane-growing districts, and the state budget.

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