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The Cabinet Committee on Economic Affairs (CCEA), which met here on Wednesday, 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.
The revised FRP will be applicable from October 1, 2024.
Briefing reporters about the decision, Union Information and Broadcasting Minister Anurag Thakur said the Union government always gave importance to the issues of farmers and
sugarcane farmers in India get the highest price for their produce compared to other countries.
What is Fair and Remunerative Price (FRP)
The Fair and Remunerative Price is the minimum price that sugar mills are legally obligated to pay to farmers for sugarcane they procure.
It is essentially a government-mandated price floor to ensure farmers receive a fair and reasonable return for their produce.
Implemented in: India, specifically for sugarcane farmers
The Government of India, based on recommendations from the Commission for Agricultural Costs and Prices (CACP)
Purpose: To ensure fair and remunerative prices for sugarcane growers, protecting them from exploitation by sugar mills
Payment: Based on the recovery rate of sugar from the sugarcane (higher recovery means higher FRP)
Benefits:
Assures minimum margins for farmers
Encourages sugarcane production
Promotes stability in the sugar industry
Additional Info:
The FRP is fixed annually, taking into account various factors like the cost of production, demand-supply situation, domestic and international sugar prices, and inter-crop price parity.
While FRP is the minimum price, some states may announce a State Advised Price (SAP) which is higher than the FRP.
The FRP helps to address the bargaining power imbalance between farmers and sugar mills, ensuring farmers receive a fair share of the profits generated from sugarcane.
Difference between frp and msp
FRP: Applies specifically to sugarcane.
MSP: Applies to a wider range of food crops, including cereals (paddy, wheat, etc.), pulses (gram, tur, etc.), and oilseeds (mustard, sunflower, etc.).
Mechanism:
FRP: Sets a minimum price that sugar mills must pay to farmers for sugarcane based on its recovery rate (amount of sugar extracted).
MSP: Acts as a guaranteed purchase price at which the government promises to procure some quantity of the specified crop, if market prices fall below MSP.
Implementation:
FRP: Set by the central government based on recommendations from the Commission for Agricultural Costs and Prices (CACP).
MSP: Announced by the government every year for each covered crop, considering several factors like production costs, market prices, and inter-crop parity.
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