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Knowledge Nugget: What you must know about the Fair and Remunerative Price (FRP) for UPSC Exam

Hello Aspirants!

Preparing for the UPSC Civil Services Examination requires a deep understanding of various socio-economic concepts crucial to India's governance and economy. One such vital topic, especially relevant for the Indian Economy and Agriculture sections (GS Paper III), is the Fair and Remunerative Price or FRP. Understanding FRP isn't just about memorizing a definition; it's about grasping its implications for farmers, the sugar industry, and the overall agricultural landscape. Let's dive into what FRP is and why it matters for your UPSC preparation.

What Exactly is the Fair and Remunerative Price (FRP)?

The Fair and Remunerative Price (FRP) is the minimum price that sugar mills are legally obligated to pay sugarcane farmers for their produce. Think of it as a guaranteed floor price specifically for sugarcane. This price is determined and announced by the Union Government based on the recommendations of the Commission for Agricultural Costs and Prices (CACP). The order mandating FRP is issued under the Sugarcane (Control) Order, 1966. It ensures that farmers receive a fair share of the value generated from sugarcane, protecting them from price volatility and potential exploitation.

It's important to distinguish FRP from the Minimum Support Price (MSP). While MSP is recommended for 23 crops, it primarily acts as a procurement price used when market prices fall significantly low. FRP, on the other hand, is a statutory minimum price that mills *must* pay for sugarcane procurement, making it legally binding.

Why is FRP Crucial for UPSC Aspirants?

Understanding FRP is non-negotiable for UPSC aspirants for several reasons:

• Syllabus Relevance: It directly falls under topics like 'Issues related to direct and indirect farm subsidies and minimum support prices', 'Public Distribution System objectives, functioning, limitations, revamping; issues of buffer stocks and food security', and 'Economics of animal-rearing' within the GS Paper III syllabus.
• Economic Impact: FRP influences the sugarcane cultivation area, sugar production levels, farmer incomes in major sugarcane-growing states (like Uttar Pradesh, Maharashtra, Karnataka), and the financial health of sugar mills. This has cascading effects on the rural economy.
• Policy Significance: It's a key government intervention policy in agriculture. Analysing its effectiveness, challenges (like payment arrears from mills), and comparison with alternative pricing models (like revenue-sharing formulas or State Advised Prices - SAPs set by some state governments, often higher than FRP) are potential areas for Mains questions.
• Prelims Focus: Questions can be asked about which body recommends FRP (CACP), which authority fixes it (Union Government - Cabinet Committee on Economic Affairs), the legal backing (Sugarcane Control Order, 1966), and its difference from MSP or SAP.

How is FRP Determined?

The CACP undertakes a detailed analysis before recommending the FRP. While the specifics can be complex, key factors considered include:

• Cost of production of sugarcane for farmers.
• Returns to farmers from alternative crops and the general trend of agricultural commodity prices.
• Availability of sugar to consumers at a fair price.
• The price at which sugar produced from sugarcane is sold by sugar mills.
• Recovery rate of sugar from sugarcane (A crucial factor – FRP is typically linked to a basic recovery rate, with a premium paid for higher recovery).
• The realization made from the sale of by-products like molasses, bagasse, and press mud (as influenced by the Rangarajan Committee report recommendations).
• Reasonable margins for farmers considering risks and profits.

The Union Government, specifically the Cabinet Committee on Economic Affairs (CCEA), considers these recommendations before finally fixing the FRP for each sugar season.

Recent Context and Broader Significance

The government periodically revises the FRP, usually annually, ahead of the sugar season (October-September). These revisions often make headlines and become points of political and economic discussion, focusing on balancing farmer welfare with industry viability and consumer prices. Delays in FRP payments by mills remain a persistent challenge, leading to farmer distress and protests, highlighting the implementation gaps in policy.

Understanding FRP connects you to larger debates around agricultural pricing, farmer income security, the viability of the sugar sector (which faces issues of cyclicality and excess production), and the push towards ethanol blending (using sugarcane juice/molasses), which impacts mill revenues and, indirectly, their capacity to pay FRP.

For comprehensive insights into government schemes and agricultural policies relevant to your exam preparation, keep exploring reliable resources. For more updates, visit https://asarkari.com.

Conclusion

In essence, the Fair and Remunerative Price (FRP) is more than just an acronym for UPSC aspirants. It's a window into India's agricultural policy framework, the political economy of agriculture, and the complex dynamics between farmers, industry, and the government. A clear understanding of its mechanism, calculation, significance, and associated challenges is essential for tackling questions in both Prelims and Mains effectively.

kam sabdo me kahein to: FRP ek minimum legal price hai jo sugar mills ko kisanon ko ganne ke liye dena padta hai, CACP ki sifarish par Kendra Sarkar dwara tay kiya jata hai, aur yeh UPSC syllabus ke liye mahatvapurna hai.

Written by Ananya Singh

Team Asarkari

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