Introduction:

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The Fair and Remunerative Price (FRP) for sugarcane is determined by the Cabinet Committee on Economic Affairs (CCEA) at the central level.

This price is calculated based on the sugar recovery rate from the cane, which represents the percentage of sugar extracted relative to the amount of cane crushed. A higher recovery rate translates to a higher FRP, reflecting increased sugar production from the cane.

Body:

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Sugar mills are legally obligated to pay the FRP to sugarcane farmers for their produce. Failure to settle FRP dues within 14 days of cane sale may lead to enforcement action by cane commissioners. Non-payment could result in the seizure of mill assets as outstanding land tax liabilities.

How does FRP differ from the Minimum Support Price (MSP)?

MSPs serve as a safety net for farmers, ensuring a minimum guaranteed payment to mitigate risks associated with agriculture, such as adverse weather conditions.

They provide stability in market prices, preventing fluctuations that could impact both farmers' incomes and consumers' access to essential food items.

The government announces MSPs annually for specific crops, indicating the price at which it will procure the produce from farmers if market prices fall below the set MSP.

MSPs are determined based on various factors including production costs, demand-supply dynamics, market trends, and ensuring a minimum profit margin for farmers, typically set at 50% over production costs.

Conclusion:

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The central government introduced MSP for sugar in 2018 as part of measures to stabilize sugar prices and maintain a balanced demand-supply ratio.

Additionally, the government has established mill-specific sales quotas. Non-compliance with these regulations could lead to punitive measures under the Essential Commodities Act of 1955, including fines, imprisonment, or both, as a means to regulate the sugar industry effectively

Other Points to Consider

Why does sugarcane have both the FRP and MSP?