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  • Transition from SMP to FRP: In 2009-10, FRP superseded sugarcane’s Statutory Minimum Price.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.

Leave a Reply

Your email address will not be published. Required fields are marked *

And get notified everytime we publish a new blog post.