Hike in Fair and Remunerative Price

About FRP Mechanism

- Fair and Remunerative Price (FRP) is an arrangement for the price to be paid to sugarcane farmers by the Sugar Mills.
- It is announced each year by the Centre, on the advice of the Commission for Agricultural Costs and Prices (CACP) and after consultation with State Governments.

CACP is an attached office of the Ministry of Agriculture and Farmers Welfare.

The system assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not and is not dependent on the performance of any individual sugar mill.
Under the FRP system, the price paid to farmers for sugarcane is not linked to the profits generated by sugar mills. Instead, FRP is based on the recovery rate of sugar from sugarcane.
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.

What is the State Advised Price?

State Advised Price or SAP is the price announced by the state government, over and above the FRP.
Since sugar pricing comes under the concurrent list, both the centre and the state have the power to fix sugarcane prices — while the centre’s price is the minimum price, states can set an SAP that is usually higher than the centre’s FRP.

Why in News?

The Union Cabinet has approved a hike in sugarcane prices, known as fair and remunerative price (FRP), for the fiscal year 2024-25.
The new FRP is set at ₹340 per quintal of sugarcane, marking an 8% increase from the previous year. This rate applies to a cane recovery rate of 10.25%.
The farmers will receive a premium of ₹3.32 per quintal for every 0.1 percentage point increase above the specified recovery rate, incentivizing efficient cane production.

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