GOVERNMENT RESOLUTION FAIR AND REMUNERATIVE PRICE (FRP)

ChinmayaIAS Academy - Current Affairs February 26, 2022 GS3 Leave a comment 335 Views

Recently, Maharashtra Government issued a government resolution which will allow sugar mills to pay the basic Fair and Remunerative Price (FRP) in two tranches.
The first installment would have to be paid within 14 days of delivery of cane, and would be as per the average recovery of the district.
Farmers would get the second installment within 15 days of the closure of the mill after calculation of the final recovery, which would take into account the sugar produced, and the ethanol produced from ‘B heavy’ or ‘C’ molasses.
Thus, instead of relying on last season’s FRP, farmers would be paid as per the current season’s recovery.
Farmers argue that this method would impact their incomes. They point out that while FRP will be paid in installments, and will depend on an unknown variable, their bank loans and other expenses are expected to be paid for as usual.
Also, farmers mostly require a lumpsum at the beginning of the season (October-November), because their next crop cycle depends on it.
FRP is the price declared by the government, which mills are legally bound to pay to farmers for the cane procured from them.
Mills have the option of signing an agreement with farmers, which would allow them to pay the FRP in installments.
Delays in payment can attract an interest up to 15% per annum, and the sugar commissioner can recover unpaid FRP as dues in revenue recovery by attaching properties of the mills.
The payment of FRP across the country is governed by the Sugarcane Control order, 1966 issued under the Essential Commodities Act (ECA), 1955 which mandates payment within 14 days of the date of delivery of the cane.
It has been determined on the recommendation of the Commission for Agricultural Costs and Prices (CACP) and announced by the Cabinet Committee on Economic Affairs (CCEA).
CACP is an attached office of the Ministry of Agriculture and Farmers Welfare. It is an advisory body whose recommendations are not binding on the Government.

Factors are considered for announcing FRP

Cost of production of sugarcane
Return to the growers from alternative crops and the general trend of prices of agricultural commodities
Availability of sugar to consumers at a fair price
Price at which sugar produced from sugarcane is sold by sugar producers
Recovery of sugar from sugarcane
The realization made from the sale of by-products viz. molasses, bagasse and press mud or their imputed value
Reasonable margins for the growers of sugarcane on account of risk and profits
The FRP is based on the recovery of sugar from the cane.
FRP has been fixed at Rs 2,900/tonne at a base recovery of 10% for the sugar season of 2021-22.
Sugar recovery is the ratio between sugar produced versus cane crushed, expressed as a percentage.
The higher the recovery, the higher is the FRP, and higher is the sugar produced.