Union Cabinet raises sugarcane FRP by ₹10 per quintal

The Cabinet Committee on Economic Affairs (CCEA) approved a Fair and Remunerative Price (FRP) of ₹365 per quintal for sugarcane for the sugar season 2026-27 ...

What Happened

The Cabinet Committee on Economic Affairs (CCEA) approved a Fair and Remunerative Price (FRP) of ₹365 per quintal for sugarcane for the sugar season 2026-27 (October 2026 to September 2027), an increase of ₹10 over the previous season's FRP of ₹355.
The FRP is set at ₹365 per quintal for a basic recovery rate of 10.25%, with a premium of ₹3.56 per quintal for each 0.1 percentage point rise in recovery above 10.25%, and a corresponding reduction for lower recovery.
To protect farmers supplying to mills with below-average recovery, the government decided that there shall be no deduction for mills where sugar recovery is below 9.5% — such farmers will receive a floor price of ₹338.30 per quintal.
The FRP of ₹365 per quintal at 10.25% recovery is 100.5% higher than the estimated production cost of sugarcane.
The decision followed recommendations by the Commission for Agricultural Costs and Prices (CACP), which factors in cost of production, return to farmers, and inter-crop price parity in its advisory.

Static Topic Bridges

Fair and Remunerative Price (FRP) — Legal Basis and Mechanism

The FRP is the minimum price that sugar mills are legally required to pay farmers for sugarcane, irrespective of whether the mill makes a profit or loss. It is determined under the Sugarcane (Control) Order, 1966, which is issued under the Essential Commodities Act, 1955. Payment within 14 days of the delivery of cane is mandatory under this Order.

The concept of FRP replaced the earlier Statutory Minimum Price (SMP) through an amendment to the Sugarcane (Control) Order, 1966 on October 22, 2009. Unlike the SMP, the FRP is linked to a recovery-based formula, meaning the price varies with the sugar content (recovery rate) of the cane — incentivising farmers to grow higher-sugar-content varieties.

FRP is fixed by CCEA on the recommendation of CACP (Commission for Agricultural Costs and Prices)
Legal instrument: Sugarcane (Control) Order, 1966 under Essential Commodities Act, 1955
SMP replaced by FRP from sugar season 2009-10 onwards
Recovery rate: the percentage of sugar extracted from cane; national average is approximately 10–11%
States can announce a State Advised Price (SAP) above the FRP — sugarcane farmers in Uttar Pradesh and Maharashtra typically receive SAP, which is higher than FRP
FRP trend: ₹210/qtl (2013-14) → ₹315/qtl (2023-24) → ₹355/qtl (2025-26) → ₹365/qtl (2026-27)

Connection to this news: The ₹365/quintal FRP is the statutory floor; sugar mills cannot pay below this. The 9.5% recovery floor protection ensures that farmers supplying to lower-efficiency mills are not penalised by the recovery-linked deduction formula.

Commission for Agricultural Costs and Prices (CACP)

The CACP is a statutory body set up in 1965 under the Ministry of Agriculture and Farmers' Welfare. It recommends minimum support prices (MSPs) for major agricultural commodities and the FRP for sugarcane, taking into account the cost of production, demand-supply balance, inter-crop price parity, terms of trade between agriculture and non-agriculture, and the likely impact of price recommendations on the general price level.

CACP recommends FRP (for sugarcane) and MSP (for 23 other crops); final approval rests with CCEA
The CACP's mandate covers kharif and rabi crops separately each year; sugarcane season is October-September
The body does not implement prices — it only recommends; procurement and payment are the responsibility of mills (for sugarcane) and government agencies (for MSP crops)
CACP considers A2+FL cost (actual paid-out cost plus imputed value of family labour) and C2 cost (A2+FL plus imputed rent and interest on owned capital) in its analysis
Government policy is to set FRP/MSP at 1.5x A2+FL cost (Swaminathan Commission recommendation partially adopted for MSP in 2018)

Connection to this news: The CACP's recommendation, accepted by CCEA, sets the ₹365 FRP at 100.5% above the production cost — satisfying the government's stated commitment to remunerative pricing for cane farmers.

India's Sugar Sector — Structure and Policy Significance

India is the world's largest producer and consumer of sugar and has large sugarcane-growing states (Uttar Pradesh, Maharashtra, Karnataka). The sector involves over 50 million sugarcane farmers and several hundred sugar mills, making the FRP one of the most politically and economically significant agricultural price signals of the year.

India's sugar production: approximately 30–35 million tonnes per year
Sugarcane is the primary feedstock for sugar, ethanol (blending programme), and molasses-based products
Ethanol blending policy (target: 20% blending by 2025-26, per the National Biofuel Policy 2018) has diversified demand for sugarcane beyond sugar production
Mills often delay payment of even the FRP — the Sugarcane (Control) Order mandates payment within 14 days, but arrears to farmers are a recurring issue
Difference between FRP (central minimum) and SAP (state-advised price): UP's SAP is typically ₹50-80/quintal above FRP, creating revenue stress for mills

Connection to this news: The ₹10 hike (₹355 to ₹365) is modest relative to farmer organisations' demands but reflects the government's balance between protecting farmer incomes and maintaining mill viability. The 9.5% recovery floor removes an earlier inequity where farmers in poorer-performing mill zones faced price deductions despite no control over mill efficiency.

Key Facts & Data

New FRP: ₹365 per quintal for sugar season 2026-27 (effective October 1, 2026)
Previous FRP: ₹355 per quintal (2025-26)
Basic recovery rate: 10.25%
Premium for higher recovery: ₹3.56/quintal per 0.1% above 10.25%
Floor price for below-9.5% recovery mills: ₹338.30/quintal (no deduction applies below 9.5%)
FRP is 100.5% above estimated production cost at 10.25% recovery
Legal basis: Sugarcane (Control) Order, 1966; Essential Commodities Act, 1955
Recommending body: CACP; approving body: CCEA
Sugar mills must pay FRP within 14 days of cane delivery, failing which 15% per annum interest is payable
India has over 500 operational sugar mills; UP alone accounts for roughly a third of national output