According to the Sugarcane (Control) Order of 1966, FRP is the minimum price that sugar mills have to pay to sugarcane farmers, while MSP is the minimum sale price of sugar that they get helping them recover their cost of production.
Following the Cabinet decision, the FRP of Rs 305 per quintal is linked to a basic recovery rate of 10.25 per cent. Recovery rate is the amount of sugar that sugarcane fetches and higher the quantum of sugar derived from sugarcane, greater the price it fetches in the market.
The official statement said for every 0.1 per cent rise in recovery, over 10.25 per cent, a premium of Rs 3.05 per quintal will have to be paid to the farmer, while for every 0.1 per cent reduction in recovery below 10.25 per cent, FRP payable will be lowered by Rs 3.05 per quintal.
However, to protect farmers’ interest, mainly those who don’t have very high-yielding varieties, the official statement said the Centre has decided to fix a price of Rs 282.12 per quintal for 9.5 per cent recovery and there shall not be any deduction below the same.
“Such farmers will get Rs 282.12 per quintal for sugarcane in the ensuing sugar season 2022-23 in place of Rs 275.50 per quintal in the current sugar season,” the official statement said.
Major sugarcane producing states such as Uttar Pradesh, Punjab and Haryana fix their own sugarcane price called ‘state advisory prices’ (SAPs), which are usually higher than the Centre's FRP.
Meanwhile, the Indian Sugar Mills Association (ISMA) in a letter to the food secretary has said hiking sugarcane FRP without commensurate increase in the MSP of sugar is burdening the sugar mills and making them uncompetitive in the global markets.
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