Commission for Agricultural Costs and Prices Current Affairs - 2020

CCEA keeps Fair and Remunerative Price of sugarcane at Rs275/quintal

Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the proposal for Determination of Fair and Remunerative Price (FRP) of sugarcane payable by sugar mills for 2019-20 sugar season.

Key Highlights

CCEA kept FRP at Rs 275 per quintal the same as last year (2018-19) for sugarcane sold to mills during forthcoming sugar season of 2019-20, much to distress of sugarcane growers.

FRP is based on recommendation of Commission of Agricultural Costs & Prices (CACP) as per its August 2018 report on- Price Policy for Sugarcane for 2019-20 season.

CCEA also approved to provide a premium of Rs.2.75 per quintal for every 0.1% increase above 10% in recovery.

Price of sugarcane is fixed by Centre/State, while price of sugar is market determined.

What is Fair and Remunerative Price?

It is the minimum price at which rate sugarcane is to be purchased by sugar mills from farmers. FRP is fixed by Union government on basis of recommendations of Commission for Agricultural Costs and Prices (CACP), an attached office of Union Ministry of Agriculture & Farmers Welfare.

Factors: Recommended FRP is achieved by taking into account various factors such as cost of production, demand-supply situation, inter-crop price parity, domestic & international prices etc.

Sugarcane’s FRP is determined under Sugarcane (Control) Order, 1966 which will be uniformly applicable all over country. Besides FRP, some states like Punjab, Haryana, Uttarakhand, Uttar Pradesh and Tamil Nadu announce a State Advised Price, which is generally higher than the FRP.

Significance: FRP approval will ensure a guaranteed price to cane growers. It also assures margins to farmers, irrespective of whether sugar mills generate a profit or not as FRP determination is in interest of sugarcane growers keeping in view their entitlement to FRP for their produce.

Delhi to award MSP as per Swaminathan Committee Report

The Delhi government has decided to introduce the Minimum Support Price (MSP) for farmers based on the recommendations of the National Commission on Farmers (NCF) headed by MS Swaminathan.

Swaminathan Committee recommendations on MSP

The National Commission on Farmers (NCF) was constituted on November 18, 2004 under the chairmanship of Professor M.S. Swaminathan. The committee made some key recommendations on land reforms, irrigation, credit and insurance, food security, employment, the productivity of agriculture and farmer competitiveness.

On the issue of MSP, the committee recommended providing farmers with a minimum support price at 50 per cent profit above the cost of production classified as C2 by the Commission for Agricultural Costs and Prices (CACP).

Production costs in Agriculture

The Commission for Agricultural Costs and Prices (CACP) proposes three definitions of production costs in agriculture. They are:

  • A2: It is the actual paid-out expenses incurred by farmers — in cash and kind on seeds, fertilisers, pesticides, hired labour, fuel, irrigation and other inputs from outside.
  • A2+FL: It includes A2 cost plus an imputed value of unpaid family labour.
  • C2: It accounts for the rentals or interest loans, owned land and fixed capital assets over and above A2+FL.

The Swaminathan Committee recommended the MSP to be basic cost and prescribed MSP 50 per cent above C2.