The Fair and Remunerative Price (FRP) is a statutory minimum price, a concept and a mechanism, that sugar mills are legally obligated to pay to sugarcane farmers for the cane they procure. It was introduced in 2009 through an amendment to the Sugarcane (Control) Order, 1966, which is itself governed by the Essential Commodities Act, 1955. The FRP replaced the older Statutory Minimum Price (SMP), which was problematic because its profit-sharing provision was rarely implemented, failing to ensure a reasonable margin for growers.
The FRP is fixed annually by the Union Government's Cabinet Committee on Economic Affairs (CCEA), based on recommendations from the Commission for Agricultural Costs and Prices (CACP). The CACP considers factors like the cost of sugarcane production, returns from alternative crops, and the realisation from the sale of by-products like molasses and bagasse. The mechanism mandates that sugar mills must pay the FRP to farmers within 14 days of the cane delivery. A key provision is that the FRP is linked to the sugar recovery rate, meaning a premium is paid for higher recovery, while a reduction applies for lower recovery.
The FRP connects to the State Advised Price (SAP), which is a higher price for sugarcane fixed by some state governments, such as Uttar Pradesh and Haryana, and which mills in those states must pay instead of the FRP. If mills delay payment, they are liable to pay interest, and the Sugar Commissioner can recover unpaid FRP as arrears of land revenue by attaching mill properties. The major change was the replacement of the SMP with the FRP in 2009, which ensured a guaranteed price and timely payment, while the core legal framework remains the Sugarcane (Control) Order, 1966.