Fair and Remunerative Price (FRP) for Sugarcane

• The Cabinet Committee on Economic Affairs authorised ₹340/quintal as the Fair and Remunerative Price (FRP) of sugarcane for the 2024-25 season, with a sugar recovery rate of 10.25%.
• This is approximately 8% greater than the FRP of sugarcane for the current season 2023-24.

Explaining Fair and Remunerative Price (FRP)

• The Legal Framework. FRP was founded under the Sugarcane Control Order of 1966.
• Minimum Payment: It signifies the minimum price that sugar mills must pay farmers for sugarcane produce.
• State Agreed Price (SAP): States have the authority to set their own SAP, which is often higher than the FRP.
• The fixing of FRP considers numerous factors, including:

1. Cost of sugarcane production,
2. Return from alternative crops,
3. Consumer sugar prices,
4. Sale price of sugar,
5. Sugarcane-to-sugar recovery rate,
6. Income from by-products (e.g., molasses, bagasse),
7. Adequate profit margins for sugarcane growers.

Calculating Sugarcane Prices

• The Central Government determines the FRP based on recommendations from the Commission for Agricultural Costs and Prices (CACP), which are then approved by the Cabinet Committee on Economic Affairs.
• State Role: States proclaim SAP, frequently exceeding the FRP.

Minimum Selling Price (MSP) for Sugar

• Market Dynamics: Minimum Selling Price (MSP) for Sugar. Sugar prices change according on market demand and supply.
• Introducing MSPs: To protect farmers’ interests, the MSP for sugar was implemented in 2018.
• Components Considered: MSP combines FRP for sugarcane with the low conversion cost of modern mills.

Basis for Price Determination

• Transition from SMP to FRP: In 2009-10, FRP superseded sugarcane’s Statutory Minimum Price.
• Consultative Process: The sugarcane price is determined by the Central Government, in consultation with state authorities and sugar industry associations, using CACP recommendations.

Source: https://www.thehindu.com/news/national/centre-increases-fair-and-remunerative-price-of-sugarcane/article67872352.ece#:~:text=The%20Cabinet%20Committee%20on%20Economic%20Affairs%2C%20which%20met%20in%20New,the%20current%20season%202023%2D24.