0.2380
766 776 6266
x

Fair and Remunerative Price

iasparliament Logo
May 29, 2017

Why in news?

The Centre’s decided to increase the Fair and Remunerative Price (FRP) for sugarcane by 11% in the Fair and Remunerative Price (FRP) for sugarcane for the upcoming sugar season.

What is FRP?

  • FRP is the minimum price that the sugar mills have to pay to farmers.
  • It is supposed to signal to farmers the need to plant more or less cane for the coming year.

What is the necessity to increase FRP?

  • The country’s sugar output dropped to a seven-year low of 203 lakh tonnes (2016-17).
  • So the domestic availability of sugar is expected to be low this year.
  • It is this scenario the decision to hike the FRP appears to be an attempt to incentivise farmers to plant more cane for the upcoming season.

What are the shortcomings of FRP?

  • Successive governments have been prompt to hike the FRP in deficit years.
  • But they have subsequently shied away from slashing it in surplus years.
  • e.g Between 2010-11 and 2017-18, despite excess production in most years, the FRP for cane has nearly doubled from Rs 130/quintal to Rs 255/quintal.
  • Contrarily, they have been reluctant to allow higher cane prices to reflect in the end-product.
  • Sugar prices in the same period have barely risen 30%, leading to a loss-making industry and unpaid cane dues.

What should be done?

  • To resolve this issue, the Centre should implement long-overdue reforms and allow cane prices to be decided by a market-based formula that shares revenue between millers and farmers in a pre-decided proportion.
  • This should be accompanied by dismantling reservations that force farmers to sell their output to a single mill.
  • Allowing cane prices to respond to market forces is also critical to ensure that alternative food crops get equal priority when farmers make their sowing decisions.

 

Source: Business Line

Login or Register to Post Comments
There are no reviews yet. Be the first one to review.

ARCHIVES

MONTH/YEARWISE ARCHIVES

Upsc Mains 2022