MC - Deep Dive - FRP Sugarcane

We know we’re approaching a season of elections. How? MSP and FRP are back in the news.

The centre has raised the FRP, or Fair and Remunerative Price, of sugarcane by 20 rupees per quintal to 275.

FRP is the price sugar mills pay farmers for sugarcane. FRP is used in the sugarcane industry as an alternative to MSP. It traces its origins to the 2012 Rangarajan Committee report which found that almost three-quarters of input cost in producing sugar comes from purchasing sugarcane. Higher FRPs tend to increase the burden on sugar mills. Following a sugarcane glut in 2017-18, dues to farmers reached a record level of Rs.20,000 crore. This forced the government’s hand, leaving them little choice but to announce a bailout package in June- a whopping Rs 7,500 crore.

On June 29th this year, Prime Minister Narendra Modi met 140 sugarcane farmers and assured them the government would announce new prices within two weeks. These prices were expected to be higher than those in the previous season. It was reported the government also plans to give incentives to farmers who sell cane having recovery higher than 9.5 %.