The Sugarcane (Control) Order of 1966 underwent an amendment on October 22, 2009, replacing the concept of Statutory Minimum Price (SMP) for sugarcane with the ‘Fair and Remunerative Price (FRP)’ beginning from the 2009-10 sugar season and onward. The determination of cane price by the Central Government is based on recommendations from the Commission for Agricultural Costs and Prices (CACP), in consultation with State Governments and feedback from sugar industry associations.
The amended provisions consider various factors for fixing the FRP of sugarcane:
• Cost of production of sugarcane
• Return to growers from alternative crops and price trends of agricultural commodities
• Consumer accessibility to sugar at fair prices
• Selling price of sugar produced from sugarcane
• Sugar recovery from sugarcane
• Revenue generated from the sale of by-products like molasses, bagasse, and press mud, or their equivalent value
• Providing reasonable margins to sugarcane growers for risk and profits
Under the FRP system, farmers no longer need to wait until the season ends or for any announcements of profits from sugar mills or the government. This new system ensures profit and risk margins for farmers regardless of whether sugar mills are profitable or not, independent of individual mill performance.
To ensure fair rewards for higher sugar recoveries and considering variations among sugar mills, the FRP is tied to a basic sugar recovery rate, with a premium payable to farmers for higher recovery rates.
For the current sugar season 2023-24, the FRP is set at Rs. 315 per quintal, linked to a basic recovery rate of 10.25%, with a premium of Rs. 3.07 per quintal for each 0.1% increase in recovery above 10.25%. Reduction in FRP occurs at the same rate for each 0.1% decrease in recovery rate until 9.5%. The government has decided not to deduct in cases where recovery falls below 9.5%, ensuring such farmers receive Rs. 291.975 per quintal for sugarcane.
Similarly, for the next sugar season 2024-25, the FRP is set at Rs. 340 per quintal, linked to a basic recovery rate of 10.25%, with a premium of Rs. 3.32 per quintal for each 0.1% increase in recovery above 10.25%. Reduction in FRP occurs at the same rate for each 0.1% decrease in recovery rate until 9.5%. The government has again decided not to deduct in cases where recovery falls below 9.5%, ensuring such farmers receive Rs. 315.10 per quintal for sugarcane.
The FRP of sugarcane payable by sugar factories for each sugar season from 2009-10 to 2024-25 is tabulated below:-
