About FRP Mechanism
- Fair and Remunerative Price (FRP) is an arrangement for the price to be paid to sugarcane farmers by the Sugar Mills and is announced each year by the Centre, on the advice of 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?
- Keeping in view interest of sugarcane farmers, the Cabinet Committee on Economic Affairs chaired by the Prime Minister Narendra Modi has approved Fair and Remunerative Price (FRP) of sugarcane for sugar season 2023-24 (October – September) at Rs.315/qtl for a basic recovery rate of 10.25%.
- It has also been approved to provide a premium of Rs.3.07/qtl for each 0.1% increase in recovery over and above 10.25%, & reduction in FRP by Rs.3.07/qtl for every 0.1% decrease in recovery.