Fair and Remunerative price

Why in news?

• The Centre approved a ?3,500-crore subsidy to sugar mills to incentivise them to export 60 lakh tonnes of surplus stock in the 2020-21 season.
• This aimed at helping mills to clear payment arrears due to cane farmers as mills as responsible for procuring Sugar cane under state mandated Fair and Remunerative price.
• The sugar industry as well as the farmers were in crisis with production at 310 lakh tonnes against the annual domestic consumption demand of 260 lakh tonnes.

What is Fair and Remunerative Price?

• The FRP is the minimum price that sugar mills must pay to sugarcane farmers. This is used in sugarcane industry to replace the Minimum Support Price.
• It is based on the Rangarajan Committee report on re-organizing the sugarcane industry.

How is FRP determined?

• It is determined on the basis of recommendations of Commission for Agricultural Costs and Prices (CACP) and after consultation with State Governments and other stake-holders.
• The Union Cabinet Committee on Economic Affairs then approves this price.

Parameters considered are:

• Cost of production, domestic and international prices, overall demand-supply situation, inter-crop price parity, terms of trade prices of primary by-products and its impact on general price level and resource use efficiency.

About State Advised Price:

• Many states also announce a State Advised Price (SAP) for sugarcanes under state legislation over and above the FRP.
• Therefore, wherever SAP is declared, it is the ruling price. Mill owners are obligated to pay SAP to farmers.

Prelims Question

"Fair and Remunerative price”, often in news is associated with:
(a)Sugar cane cultivation
(b)Khadi industry
(c)Rubber cultivation
(d)Minor Forest produce auctions

Answer to prelims question