Fair and Remunerative Price

Source: TOI

Context: The Cabinet Committee on Economic Affairs has approved a Fair and Remunerative Price (FRP) of ₹355 per quintal for sugarcane for the 2025–26 sugar season.

About Fair and Remunerative Price (FRP):

• What is FRP?

• FRP is the minimum price sugar mills must legally pay to sugarcane farmers. It ensures fair compensation and is a statutory mechanism under central government policy.

• FRP is the minimum price sugar mills must legally pay to sugarcane farmers.

• It ensures fair compensation and is a statutory mechanism under central government policy.

• Established in: Introduced in 2009, replacing the older Statutory Minimum Price (SMP)

• Legal basis: Governed under the Essential Commodities Act, 1955, ensuring price parity and farmer protection.

• FRP fixed by:

• Recommended by the Commission for Agricultural Costs and Prices (CACP). Final decision rests with the Cabinet Committee on Economic Affairs (CCEA).

• Recommended by the Commission for Agricultural Costs and Prices (CACP).

• Final decision rests with the Cabinet Committee on Economic Affairs (CCEA).

• Objectives of FRP:

• Provide assured income to sugarcane farmers. Shield farmers from market price volatility. Ensure sustainable production and protect farm livelihoods. Support a stable and fair supply chain in the sugar sector.

• Provide assured income to sugarcane farmers.

• Shield farmers from market price volatility.

• Ensure sustainable production and protect farm livelihoods.

• Support a stable and fair supply chain in the sugar sector.

• Process of Fixing FRP:

• Cabinet Committee on Economic Affairs (CACP) calculates FRP based on: Cost of production (A2 + FL), Sugar recovery rate, Demand-supply trends and Profit margin for farmers. Consultations held with State Governments, industry stakeholders, and farmers’ bodies.

• Cabinet Committee on Economic Affairs (CACP) calculates FRP based on: Cost of production (A2 + FL), Sugar recovery rate, Demand-supply trends and Profit margin for farmers.

• Consultations held with State Governments, industry stakeholders, and farmers’ bodies.

• Key Features of the FRP System:

• Annual Announcement: FRP is declared each year by the Government before the sugarcane crushing season (October–September). State Advisory Price (SAP): Some states fix a higher SAP than FRP, in such cases, sugar mills must pay the higher of the two. 14-Day Payment Rule: Sugar mills are legally bound to pay farmers within 14 days of cane delivery. Penalty Provision: If mills delay payments, they are liable to pay interest and may face license cancellation. Lower Recovery Protection: Even if sugar recovery falls below 9.5%, farmers are guaranteed a minimum of ₹329.05/qtl, with no deduction applied.

• Annual Announcement: FRP is declared each year by the Government before the sugarcane crushing season (October–September).

• State Advisory Price (SAP): Some states fix a higher SAP than FRP, in such cases, sugar mills must pay the higher of the two.

• 14-Day Payment Rule: Sugar mills are legally bound to pay farmers within 14 days of cane delivery.

• Penalty Provision: If mills delay payments, they are liable to pay interest and may face license cancellation.

• Lower Recovery Protection: Even if sugar recovery falls below 9.5%, farmers are guaranteed a minimum of ₹329.05/qtl, with no deduction applied.