Recently, a rise in the Fair and Remunerative Price (FRP) of sugarcane for the 2021-22 sugar season has been approved by the Cabinet Committee on Economic Affairs (CCEA). This approval marks notable progress in the agriculture sector, particularly for sugarcane producers.
Understanding Sugarcane Cultivation
Sugarcane grows ideally between temperatures of 21-27°C in a hot and humid climate. It receives about 75-100 cm of rainfall. The crop thrives in deep, rich loamy soil that is well-drained. It can adapt to a variety of soil types, from sandy loam to clay loam.
Sugarcane farming requires manual labour right from sowing to harvesting. It serves as the main source of sugar, gur (jaggery), khandsari, and molasses. In terms of sugarcane production, India ranks second globally after Brazil. Key sugarcane producing states in India are Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, and Bihar in descending order.
Government Initiatives to Support Sugarcane Production
The government has launched initiatives like Scheme for Extending Financial Assistance to Sugar Undertakings (SEFASU) and National Policy on Biofuels to aid sugarcane production and uplift the sugar industry.
Sugarcane Pricing: Understanding FRP and SAP
Two key determinants of Sugarcane pricing are the Fair and Remunerative Price (FRP) and the State Advised Prices (SAP). The central government establishes the FRP based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) and approves it through the Cabinet Committee on Economic Affairs (CCEA), helmed by the Prime Minister.
The FRP is formulated based on the Rangarajan Committee report, aiming to reorganize the sugarcane industry. Meanwhile, the SAP is pronounced by the governments of the key sugarcane-producing states and is usually higher than the FRP.
Nuances of FRP and MSP
FRP represents the minimum price that sugar mills must pay to farmers for purchasing sugarcane. On the other hand, Minimum Support Price (MSP) is a minimum price for any crop the government deems profitable for farmers and deserving support. This is also the price that government agencies would pay upon procuring the particular crop.
While sugarcane is a mandated FRP crop, MSP is applicable for 14 kharif crops, 6 rabi crops, and many other commercial crops like paddy, wheat, barley, jowar, bajra, maize, ragi, gram, arhar/tur, moong, urad, lentil, groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed, niger seed, raw cotton, raw jute, copra, and de-husked coconut.
Legal Governance of Sugarcane Pricing
Sugarcane pricing is overseen by statutory provisions of the Sugarcane (Control) Order, 1966 in accordance with the Essential Commodities Act (ECA), 1955. However, MSP lacks statutory backing; it’s not obligatory or supported by any law.
The Commission for Agricultural Costs and Prices (CACP) is an extension of the Ministry of Agriculture and Farmers Welfare. It’s an advisory body with non-binding recommendations. The CACP plays a central role in deciding the FRP and MSP, considering factors like the cost of production, return to growers, price trends, and the supply-demand situation. It also considers the implications for consumers, environmental impact, and trade terms between agriculture and non-agriculture sectors.