Note4Students
From UPSC perspective, the following things are important :
Prelims level: Fair and Remunerative Price (FRP)
Mains level: Not Much
Introduction
- The Cabinet Committee on Economic Affairs approved ₹340/quintal as the Fair and Remunerative Price (FRP) of sugarcane for sugar season 2024-25 at sugar recovery rate of 10.25%.
- This is about 8% higher than FRP of sugarcane for the current season 2023-24.
Fair and Remunerative Price (FRP): Explained
- Legal Framework: FRP is established under the Sugarcane Control Order, 1966.
- Minimum Payment: It denotes the minimum price obligated to be paid by sugar mills to farmers for their sugarcane produce.
- State Agreed Price (SAP): States have the authority to determine their SAP, typically higher than the FRP.
- The fixation of FRP considers various factors, including:
- Cost of sugarcane production,
- Return from alternative crops,
- Consumer sugar prices,
- Sale price of sugar,
- Sugarcane-to-sugar recovery rate,
- Income from by-products (e.g., molasses, bagasse),
- Adequate profit margins for sugarcane growers.
Determining Sugarcane Prices
- Central Determination: FRP is set by the Central Government based on recommendations from the Commission for Agricultural Costs and Prices (CACP) and endorsed by the Cabinet Committee on Economic Affairs.
- State Role: States announce SAP, often surpassing the FRP.
Minimum Selling Price (MSP) for Sugar
- Market Dynamics: Sugar prices fluctuate based on market demand and supply.
- Introducing MSP: To safeguard farmers’ interests, MSP for sugar was introduced in 2018.
- Components Considered: MSP incorporates elements of FRP for sugarcane and the minimal conversion cost of efficient mills.
Basis of Price Determination
- Transition from SMP to FRP: In 2009-10, FRP replaced the Statutory Minimum Price (SMP) of sugarcane.
- Consultative Process: The Central Government, in consultation with state authorities and sugar industry associations, determines the sugarcane price based on CACP recommendations.
Try this PYQ from CSP 2019:
Q. The Fair and Remunerative Price (FRP) of sugarcane is approved by the:
(a) Cabinet Committee on Economic Affairs
(b) Commission for Agricultural Costs and Prices
(c) Directorate of Marketing and Inspection, Ministry of Agriculture
(d) Agricultural Produce Market Committee
Post your answers here.
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