Explained | Fair and Remunerative Price (FRP) of sugarcane

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved the Fair and Remunerative Price (FRP) of sugarcane for sugar season 2024-25 at Rs 340 per quintal.

FRP is the minimum price that mills have to pay to sugarcane growers.

Sugar season runs from October to September.

The new price of sugarcane is about 8 per cent higher than FRP of sugarcane for the current season 2023-24. 

The revised FRP will be applicable with effect from October 1, 2024.

Sugarcane is grown mainly in Maharashtra, Uttar Pradesh, and Karnataka.

This decision of the central government is going to benefit more than 5 crore sugarcane farmers (including family members) and lakhs of other persons involved in sugar sector.

With the approval of the Cabinet, sugar mills will pay FRP of sugarcane at Rs 340 per quintal at recovery of 10.25 per cent.

With each increase of recovery by 0.1 per cent, farmers will get an additional price of Rs 3.32 while the same amount will be deducted on reduction of recovery by 0.1 per cent.

However, Rs 315.10 per quintal is the minimum price of sugarcane which is at recovery of 9.5 per cent.

What is FRP? How is it calculated?

• FRP is the minimum price that mills have to pay to sugarcane growers.

• With the amendment of the Sugarcane (Control) Order, 1966 on October 22, 2009, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the ‘Fair and Remunerative Price (FRP)’ of sugarcane.  

• The cane price announced by the central government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) in consultation with the state governments and after taking feedback from associations of sugar industry. 

• The Commission for Agricultural Costs & Prices (CACP) is an attached office of the ministry of agriculture and farmers welfare. It was established in January 1965. 

The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:

1) Cost of production of sugarcane.

2) Return to the growers from alternative crops and the general trend of prices of agricultural commodities.

3) Availability of sugar to consumers at a fair price.

4) Price at which sugar produced from sugarcane is sold by sugar producers.

5) Recovery of sugar from sugarcane.

6) The realisation made from sale of byproducts — molasses, bagasse and press mud or their imputed value. 

7) Reasonable margins for the growers of sugarcane on account of risk and profits.

• Under the FRP system, the farmers are not required to wait till the end of the season or for any announcement of the profits by sugar mills or the government. This system also assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not. 

• In order to ensure that higher sugar recoveries are adequately rewarded and considering variations amongst sugar mills, the FRP is linked to a basic recovery rate of sugar, with a premium payable to farmers for higher recoveries of sugar from sugarcane.

• The FRP was Rs 210 per quintal in 2013-14 marketing year, Rs 220 in 2014-15, Rs 230 in 2015-16 and 2016-17. It was Rs 255 in 2017-18, Rs 275 in 2018-19 and 2019-20, Rs 285 in 2020-21, Rs 290 in 2021-22, Rs 305 in 2022-23 and Rs 315 per quintal in 2023-24 marketing year.