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Fair And Remunerative Price (FRP) in Two Tranches

Fair And Remunerative Price (FRP):

 

Maharashtra Government issued a government resolution which will allow sugar mills to pay the basic Fair and Remunerative Price (FRP) in two tranches.

  • The first installment would have to be paid within 14 days of delivery of cane, and would be as per the average recovery of the district.
  • Farmers would get the second installment within 15 days of the closure of the mill after calculation of the final recovery, which would take into account the sugar produced, and the ethanol produced from ‘B heavy’ or ‘C’ molasses.
  • Thus, instead of relying on last season’s FRP, farmers would be paid as per the current season’s recovery.
  • Farmers argue that this method would impact their incomes. They point out that while FRP will be paid in installments, and will depend on an unknown variable, their bank loans and other expenses are expected to be paid for as usual.
  • Also, farmers mostly require a lumpsum at the beginning of the season (October-November), because their next crop cycle depends on it.
  • FRP is the price declared by the government, which mills are legally bound to pay to farmers for the cane procured from them.
  • Mills have the option of signing an agreement with farmers, which would allow them to pay the FRP in installments.
  • Delays in payment can attract an interest up to 15% per annum, and the sugar commissioner can recover unpaid FRP as dues in revenue recovery by attaching properties of the mills.
  • The payment of FRP across the country is governed by the Sugarcane Control order, 1966 issued under the Essential Commodities Act (ECA), 1955 which mandates payment within 14 days of the date of delivery of the cane.
  • It has been determined on the recommendation of the Commission for Agricultural Costs and Prices (CACP) and announced by the Cabinet Committee on Economic Affairs (CCEA).
  • CACP is an attached office of the Ministry of Agriculture and Farmers Welfare. It is an advisory body whose recommendations are not binding on the Government.
  • CCEA is chaired by the Prime Minister of India.
  • The FRP is based on the Rangarajan Committee report on reorganizing the sugarcane industry.

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