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How is the minimum price of sugarcane determined in India? Examine the issues with respect to fair and remunerative price (FRP) of sugarcane with special emphasis on profitability of sugar mills.

Topic: Issues related to direct and indirect farm subsidies and minimum support prices.

5. How is the minimum price of sugarcane determined in India? Examine the issues with respect to fair and remunerative price (FRP) of sugarcane with special emphasis on profitability of sugar mills. (250 words)

Difficulty level: Tough

Reference: Live Mint

Why the question:

The Central government has hiked the minimum price that sugar mills must pay to cane farmers by ₹5 a quintal, setting the fair and remunerative price (FRP) at ₹290 a quintal for the 2021-22 sugar season.             

Key Demand of the question:

To mention the various way in which minimum price for sugarcane is determine and write about issues in FRP.

Directive word: 

Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Structure of the answer:

Introduction: 

Mention the scenario about the Sugarcane and Sugar industry.

Body:

Write in detail about the two mechanisms for determination of minimum price of sugarcane in India – Fair and remunerative price (FRP) and State Advised Prices (SAP).

Write about issues in regards to Fair and remunerative price (FRP). Explain how rise FRP without rise in sugar prices have negatively impacted the sugar Industry.

Conclusion:

Conclude with a way forward.