Sugar Industry – FRP, SAP, Rangarajan Committee, EBP, MIEQ, etc.

Centre raises Fair Prices for Sugarcane Harvest

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FRP

Mains level : Issues with Sugarcane Pricing

The Cabinet Committee on Economic Affairs has approved Fair and Remunerative Price (FRP) of sugarcane for sugar season 2022-23 (October – September) at ₹305 per quintal.

What is FRP?

  • FRP is fixed under a sugarcane control order, 1966.
  • It is the minimum price that sugar mills are supposed to pay to the farmers.
  • However, states determine their own State Agreed Price (SAP) which is generally higher than the FRP.

Factors considered for FRP:

  • The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:
  1. a) cost of production of sugarcane;
  2. b) return to the growers from alternative crops and the general trend of prices of agricultural commodities;
  3. c) availability of sugar to consumers at a fair price;
  4. d) price at which sugar produced from sugarcane is sold by sugar producers;
  5. e) recovery of sugar from sugarcane;
  6. f) the realization made from the sale of by-products viz. molasses, bagasse, and press mud or their imputed value;
  7. g) reasonable margins for the growers of sugarcane on account of risk and profits.

Who determines Sugarcane prices?

Sugarcane prices are determined by the Centre as well as States.

  1. The Centre announces Fair and Remunerative Prices which are determined on the recommendation of the Commission for Agricultural Costs and Prices (CACP) and are announced by the Cabinet Committee on Economic Affairs, which is chaired by Prime Minister.
  2. The State Advised Prices (SAP) are announced by key sugarcane producing states which are generally higher than FRP.

Minimum Selling Price (MSP) for Sugar

  • The price of sugar is market-driven & depends on the demand & supply of sugar.
  • However, with a view to protecting the interests of farmers, the concept of MSP of sugar has been introduced since 2018.
  • MSP of sugar has been fixed taking into account the components of Fair & Remunerative Price (FRP) of sugarcane and minimum conversion cost of the most efficient mills.

Basis of price determination

  • With the amendment of the Sugarcane (Control) Order, 1966, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the Fair and Remunerative Price (FRP)’ of sugarcane in 2009-10.
  • 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).
  • This is done in consultation with the State Governments and after taking feedback from associations of the sugar industry.

Try this PYQ:

 

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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Kuvar Bhanu Pratap Singh
Kuvar Bhanu Pratap Singh
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Saumyadeep Shome
Saumyadeep Shome
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Geetanjali Basumatary
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