The Union Government on 6 February 2014 approved the increase in the Fair and Remunerative Price (FRP) for sugarcane by 10 rupees per quintal for 2014-15 marketing season (October - September). As a result, FRP of sugarcane will increase from 210 ruppes per quintal to 220 rupees per quintal. This decision of hike in price was taken during a meet of the Cabinet Committee on Economic Affairs in New Delhi.
FRP is the minimum price that has been legally guaranteed to the sugarcane farmers, whereas, the state government has the right to fix Statutory Advised Price (SAP) as their own prices. Even the millers are free to offer any price above the FRP price announced by the Union government. FRP for sugarcane has been fixed by taking the margins for sugarcane farmers on the basis of production cost of sugarcane including transportation costs.
For this year, the government has pegged sugar output at 24.1 million tonnes, which is less than the 25 million tonnes achieved last year. After Brazil, India is the second largest producer of sugar in the world and is the biggest consumer of the sweetener. 23 million tonnes is the total annual demand of sugar in India.
This FRP hike proposal had been done following the recommendation of the Commission for Agricultural Costs and Prices (CACP) which advises the government on pricing policy for major farm produce. CACP is a statutory body.