Fair and Remunerative Price

Why in news?

• The Central government has hiked the minimum price that sugar mills must pay to cane farmers by ?5 a quintal, setting the fair and remunerative price (FRP) at ?290 a quintal for the 2021-22 sugar seasons.

Fair and Remunerative Price:

• The FRP is the minimum price that sugar mills must pay to sugarcane farmers. This is used in sugarcane industry to replace the Minimum Support Price.
• It is based on the Rangarajan Committee report on re-organizing the sugarcane industry.

How is FRP determined?

• It is determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP) and after consultation with State Governments and other stake-holders.
• The Union Cabinet Committee on Economic Affairs then approves this price.
• Parameters considered are:
  • Cost of production, domestic and international prices, overall demand-supply situation, inter-crop price parity, terms of trade prices of primary by-products and its impact on general price level and resource use efficiency.

State Advised Price:

• Many states also announce a State Advised Price (SAP) for sugarcanes under state legislation over and above the FRP.
• Therefore, wherever SAP is declared, it is the ruling price. Mill owners are obligated to pay SAP to farmers

PRELIMS QUESTION

Consider the following statement regarding Fair and Remunerative Price (FRP) of sugarcane:

1. The FRP is the minimum price that sugar mills must pay to sugarcane farmers.

2. It is determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP).

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer