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

Fair and Remunerative Price (FRP) of Sugarcane


From UPSC perspective, the following things are important :

Prelims level: Fair and Remunerative Price (FRP)

Mains level: Not Much


  • 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:
  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.

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


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