Context:
In a significant move to support India’s agrarian economy, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved an increase in the Fair and Remunerative Price (FRP) of sugarcane to ₹355 per quintal for the 2025-26 sugar season. This decision benefits around 5 crore farmers and 5 lakh sugar mill workers nationwide.
Key Highlights:
New FRP Rate Announced
- ₹355 per quintal for sugarcane with a basic recovery rate of 10.25%, up from ₹340 in 2024-25.
- 4.41% higher than the current season’s FRP.
- FRP is 105.2% higher than the cost of production, estimated at ₹173 per quintal.
Incentives Based on Sugar Recovery Rates
- Premium of ₹3.46/quintal for every 0.1% rise in recovery above 10.25%.
- Deduction of ₹3.46/quintal for each 0.1% fall below 10.25%.
- No deduction for recovery below 9.5%; such farmers will still receive ₹329.05/quintal.
Basis for Decision
- Recommendations from the Commission for Agricultural Costs and Prices (CACP).
- Consultations held with State Governments and stakeholders.
Payment Performance
- 2023-24 Season: ₹1,11,703 crore (99.92%) of the ₹1,11,782 crore dues paid.
- 2024-25 Season (ongoing): ₹85,094 crore (87%) of the ₹97,270 crore dues cleared by April 28, 2025.
Economic & Employment Impact
- Sugarcane farming and processing support millions of livelihoods across farming, factory work, transport, and rural labour sectors.
Implications
This FRP hike reinforces the Centre’s commitment to doubling farmer incomes, ensuring timely cane payments, and strengthening rural economic stability through targeted policy support.
What is Fair and Remunerative Price (FRP)?
Definition:
The Fair and Remunerative Price (FRP) is the minimum price set by the Government of India that sugar mills must legally pay to sugarcane farmers for their produce. It is designed to ensure that farmers receive a fair return on their crop.
Legal Framework
- Governed by the Sugarcane (Control) Order, 1966, under the Essential Commodities Act (ECA), 1955.
- FRP must be paid within 14 days of cane delivery.
- Delayed payments attract interest up to 15% per annum.
- Sugar commissioners can recover unpaid FRP dues through revenue recovery processes, including property attachment of defaulting mills.
Payment Terms
- Mills may enter agreements with farmers to pay FRP in installments.
- FRP is binding, irrespective of market prices for sugar.
Who Recommends and Approves FRP?
- Recommended by the Commission for Agricultural Costs and Prices (CACP), an advisory body under the Ministry of Agriculture and Farmers Welfare.
- Final FRP is approved by the Cabinet Committee on Economic Affairs (CCEA), which is chaired by the Prime Minister of India.
- The policy is based on suggestions from the Rangarajan Committee on sugarcane industry reform.
Key Factors Considered for FRP Determination
- Cost of production of sugarcane
- Returns from alternative crops and general price trends of agricultural commodities
- Fair price for consumers of sugar
- Selling price of sugar by producers
- Sugar recovery rate from cane (efficiency)
- Realization from by-products such as molasses, bagasse, and press mud
- Reasonable margin for farmers covering risk and profit
