What : Fair and remunerative price (FRP) is the minimum price at which rate sugarcane is to be purchased by sugar mills from farmers.

Who calculates : Commission of Agricultural Costs & Prices (CACP)

How is sugarcane prices determined :

• With the amendment of the Sugarcane (Control) Order, 1966 on 22.10.2009, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the ‘Fair and Remunerative Price (FRP)’ of sugarcane for 2009-10 and subsequent sugar seasons. 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) in consultation with the State Governments and after taking feedback from associations of sugar industry. The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:-

1. cost of production of sugarcane;
2. return to the growers from alternative crops and the general trend of prices of agricultural commodities;
3. availability of sugar to consumers at a fair price;
4. price at which sugar produced from sugarcane is sold by sugar producers;
5. recovery of sugar from sugarcane;
6. the realization made from sale of by-products viz. molasses, bagasse and press mud or their imputed value
7. reasonable margins for the growers of sugarcane on account of risk and profits

• Under the FRP system, the farmers are not required to wait till the end of the season or for any announcement of the profits by sugar mills or the Government. The new system also 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.
• 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 in news : Farmers of Karnataka have asked for higher FRP