Context:
Cabinet Committee on Economic Affairs chaired by PM approved the FRP of sugarcane for Sugar Season 2024-25
Fair and Remunerative Price (FRP):
- Legally mandated price that mills must pay to farmers for sugarcane procurement
- Cabinet Committee on Economic Affairs (CCEA) fixes the FRP with inputs from the Commission for Agricultural Costs and Prices (CACP).
- Legal Basis: Governed by the Sugarcane Control Order, 1966, which mandates full payment within 14 days of cane delivery.
- Payment Flexibility: Mills can enter into agreements with farmers to pay in installments instead of a lump sum.
- Delayed Payment Consequences: Interest of up to 15% per annum may be levied, and unpaid FRP can be recovered by the sugar commissioner through revenue recovery, including property attachment.
- Factors Influencing FRP Fixation:
- Cost of production of sugarcane.
- Alternative crop returns and overall pricing trends in agriculture.
- Ensuring fair sugar prices for consumers.
- The sale price of sugar by producers.
- Sugar recovery rate from cane.
- Revenue from by-products like molasses, bagasse, and press mud.
- A reasonable profit margin for farmers, considering risk factors.
Source: BL
Previous Year Question
Consider the following statements:
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2020 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (d)
Explanation:
The overall procurement quantity should not normally exceed 25% of the actual production of the commodity for that particular year/season. Over and above the procurement limit of 25%, if any, prior approval of the Department of Agriculture (DAC) shall be required. Hence, statement 1 is not correct.
The MSP is fixed by the Central government, based on the average of MSP proposals made by various states, some of which can be higher than the Centre’s recommendation. While the proposals based on input costs vary from state to state, the MSP is fixed to avoid price inequity. When the market prices dip to a level that is below the MSP, the government agencies buy over the produce in order to protect the farmers. Thus market prices can rise above MSP. Hence, statement 2 is not correct.