JAGTIV · Previous Year Questions

UPSC

ECONOMY · 2015

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Previous Year Question

The Fair and Remunerative Price (FRP) of sugarcane is approved by the:

A.

Cabinet Committee on Economic Affairs

B.

Commission for Agricultural Costs and Prices

C.

Directorate of Marketing and Inspection, Ministry of Agriculture

D.

Agricultural Produce Market Committee

Correct Answer: A

Detailed Solution

The Fair and Remunerative Price (FRP) of sugarcane is approved on behalf of the Central Government by the Cabinet Committee on Economic Affairs (CCEA). Therefore, option (a) is correct.

The distinction between the roles of CACP and CCEA is important:

  • The Commission for Agricultural Costs and Prices (CACP) recommends the FRP of sugarcane.

  • The views of State Governments and other stakeholders are also considered.

  • The final decision and approval are given by the CCEA.

  • The approved FRP is notified by the Central Government under the Sugarcane (Control) Order, 1966.

The following factors are considered while determining FRP:

  • Cost of producing sugarcane.

  • Returns available to farmers from alternative crops.

  • General trends in agricultural commodity prices.

  • The need to provide sugar to consumers at a reasonable price.

  • Sugar recovery rate from sugarcane.

  • Realisation from the sale of sugar.

  • Value of by-products such as molasses, bagasse and press mud.

  • A reasonable margin for farmers, considering risk and profit.

FRP is a legally enforceable minimum price that sugar mills must pay for sugarcane supplied by farmers. The FRP mechanism replaced the earlier Statutory Minimum Price (SMP) system from the 2009-10 sugar season.

Current status (2026)

The FRP mechanism remains operational. For the current 2025-26 sugar season, the CCEA fixed the sugarcane FRP at ₹355 per quintal for a basic recovery rate of 10.25%.

  • For every 0.1 percentage-point increase in recovery above 10.25%, an additional premium of approximately ₹3.46 per quintal is payable.

  • For mills having a recovery rate of 9.5% or below, farmers are not to receive less than approximately ₹329.05 per quintal.

  • A sugar season generally runs from October to September of the following year.

Thus, in September 2026, the relevant ongoing sugar season is 2025-26. The rate for the next sugar season takes effect through a separate CCEA decision.

CACP does not grant the final approval to FRP; it makes the recommendation. Final approval is given by the CCEA.

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