FRP and SAP: How Cane Prices Are Set

How the central government sets a fair and remunerative price for cane, why some states add higher state advised prices, and how this affects mills.

Unlike most crops, sugarcane has a legally binding minimum price that mills must pay.

FRP

The Fair and Remunerative Price (FRP) is set by the Centre, based on recommendations from the CACP.
For the 2025-26 season, the FRP was set at 355 rupees per quintal for a basic recovery rate of 10.25 percent.
It’s linked to recovery: the share of sugar extracted from cane. Higher recovery means a higher price.

SAP

Some states, especially Uttar Pradesh, Punjab and Haryana, announce a State Advised Price (SAP) higher than the FRP, which mills in those states must pay.

The problem

Cane prices are fixed by government.
Sugar prices are partly market-driven.
When sugar prices fall and cane prices rise, mills lose money.

Minimum selling price

To protect mills, the Centre sets a minimum selling price for sugar, around 31 rupees per kg since 2019, below which mills can’t sell to buyers.

Distortion

Fixed cane prices encourage more cane planting, sometimes creating surpluses.

The price squeeze

A UP mill pays farmers the SAP, but a sugar glut pushes market prices down. The mill's revenue falls below costs, and it delays payments to farmers.

Thinking cane prices are set by the market

The government sets FRP and some states set higher SAP.

Key takeaways

The Centre sets the FRP, linked to recovery rates.
Some states set a higher SAP.
Fixed cane prices can squeeze mills when sugar prices fall.
A minimum selling price for sugar protects mills.