Government Constitutes Committee to Examine Issues Relating to Sugarcane Farmers and the Sugar Sector

1. At a Glance

• The Union Government set up a committee chaired by Prof. Ramesh Chand, former Member of NITI Aayog, to look into complaints from sugarcane farmers and recommend fixes [1].
• It covers three linked pricing issues: what farmers earn for their cane (remunerative returns), the minimum price at which mills can sell sugar (ex-mill Minimum Selling Price, or MSP, of sugar), and the money mills can afford to pay [1].
• It also covers how mills measure and pay for cane: testing of sugar recovery (how much sugar is extracted from the cane), calibration of weighing scales, and weight deductions on cane cut by machine [1].
• UPSC relevance: this links agricultural pricing (the Fair and Remunerative Price, or FRP), food processing, the Essential Commodities Act framework, legal metrology and cooperative federalism (Centre and states working together).

2. Why in the News

• 14 Oct 2026: The Ministry of Consumer Affairs, Food & Public Distribution announced the committee through PIB [1].
• The committee followed a meeting between sugarcane farmers' representatives from Karnataka and Maharashtra, the Union Minister of Agriculture & Farmers Welfare and the Union Minister of Consumer Affairs, Food & Public Distribution [1].
• 5 May 2026: The Cabinet Committee on Economic Affairs (CCEA) approved an FRP of ₹365/qtl for sugar season 2026-27, applicable from 1 Oct 2026 [2].

3. Background & Evolution

• Legal basis of FRP: the FRP is fixed under the Sugarcane (Control) Order, 1966, on the recommendation of the Commission for Agricultural Costs and Prices (CACP) after consulting state governments [9].
• 7 Jun 2018: The Department of Food & Public Distribution issued the Sugar Price (Control) Order, 2018, which barred mills from selling white or refined sugar below ₹29/kg at the factory gate [5].

• The stated purpose was to prevent cash losses for mills so they could clear farmers' cane dues on time [5].

• 14 Feb 2019: The MSP of sugar was raised from ₹29/kg to ₹31/kg [6].

• Selling below the MSP attracts penal action under the Essential Commodities Act, 1955 [6].

• 2018-19: The Union Government disbursed soft loans of about ₹7,402 crore to sugar mills so they could clear farmers' cane dues for that season [7].

• Cane price payable to farmers (all-India) [8]:
• 2016-17: ₹55,340 cr
• 2017-18: ₹83,629 cr
• 2018-19: ₹86,617 cr
• 2019-20: ₹75,907 cr

• 2020-21: ₹92,881 cr

• FRP trajectory:

• 2020-21: ₹285/qtl [4]
• 2024-25: ₹340/qtl [4]
• 2025-26: ₹355/qtl [3][4]
• 2026-27: ₹365/qtl [2]

4. Core Static Facts

Item	Fact
Announcing ministry	Ministry of Consumer Affairs, Food & Public Distribution [1]
Chairman	Prof. Ramesh Chand: NITI Aayog Member 2015–2026; former Director, ICAR-NIAP; Member, Fifteenth Finance Commission [1]
Members	Agriculture Commissioner (MoA&FW); Joint Secretary (Sugar), Department of Food & Public Distribution; Joint Secretary (Legal Metrology), Department of Consumer Affairs [1]
Terms of reference (ToR)	(i) Remunerative returns to farmers, based on cultivation costs; (ii) revision of the ex-mill MSP of sugar, based on production cost, market realisation and mill viability; (iii) testing, reporting and transparent verification of recovery; (iv) weighment practices, including calibration, inspection and verification; (v) weight deductions for mechanically harvested cane and actual losses from it; (vi) financial impact on cane price; (vii) any related matter [1]
Consultation	Farmers' representatives, sugar mill associations, state governments and experts [1]
Deadline	"As early as possible", with no fixed date; report goes to the "competent authority" [1]
FRP 2026-27	₹365/qtl at 10.25% basic recovery. Premium or reduction: ₹3.56/qtl for each 0.1% of recovery above or below 10.25%. No deduction below 9.5% recovery. Increase: 2.81% over 2025-26 [2]
Cost of production 2026-27	A2+FL = ₹182/qtl, so the FRP is about 100.5% above cost [2]
FRP 2025-26	₹355/qtl at 10.25% recovery. Premium: ₹3.46/qtl per 0.1%. Floor price at mills below 9.5% recovery: ₹329.05/qtl [3]
Sugar MSP instrument	Sugar Price (Control) Order, 2018; enforced under the Essential Commodities Act, 1955 [5][6]
Last notified sugar MSP found	₹31/kg (since 14 Feb 2019) [6]. I could not confirm a later revision from the sources.

5. Multi-Dimensional Analysis

Economic

• Farmers' payment is tied to the FRP, but mills' ability to pay depends on what they earn from sugar. This is why the committee is examining the FRP and the sugar MSP together [1][5].
• FRP has risen from ₹285 to ₹365/qtl between 2020-21 and 2026-27 [2][4]. The sugar MSP has stayed at ₹31/kg since 2019 [6]. This mismatch puts pressure on mill finances and leads to cane payment arrears.
• The Centre has stepped in before when mills could not pay, for example through the ₹7,402 cr soft loans in 2018-19 [7].

Administrative / Federal

• Responsibility is split. FRP is fixed by the Centre (CCEA, on CACP advice) [9]. Sugar pricing is handled by the Department of Food & Public Distribution [5]. Weighing scales come under the Legal Metrology wing [1]. State governments are consulted on both FRP and this committee [1][9].
• The committee's members are drawn from all three wings, which shows how cross-cutting the problem is [1].

Governance / Transparency

• How mills test and report recovery rates determines whether farmers get the premium (₹3.56/qtl per 0.1%) or not [1][2]. Unclear testing can therefore cost farmers money.
• The ToR covers whether weighbridge calibration, inspection and verification are adequate, which is a consumer-protection issue on the farmer's side [1].

Scientific / Technological

• Mills deduct a share of weight from mechanically harvested cane to account for trash and losses. The committee will check whether these deductions match the actual losses [1].
• Recovery-testing methods decide what counts as "fair" recovery, so measurement technology is central to the dispute [1].

Social

• The trigger came from farmers in Karnataka and Maharashtra [1]. Smallholders there depend on timely payment and accurate weighing.

6. Recent Developments (last 12–18 months)

• 2025 (data dated 28 Apr 2025): FRP 2025-26 set at ₹355/qtl [3].
• 5 May 2026: CCEA approved FRP 2026-27 at ₹365/qtl, with cost A2+FL at ₹182/qtl [2].
• 2026: The stockholding limit for bulk sugar consumers was relaxed from 15 to 30 days. The extra stock must come only from imported sugar under the Advance Authorisation Scheme (AAS) and Tariff Rate Quota (TRQ) [11]. The search snippet did not give the exact date.
• Aug 2026: PIB published a background document, India's Sugar Industry [10].
• 14 Oct 2026: The Ramesh Chand Committee was constituted [1].

7. Prelims Hooks

• The committee was announced by the Ministry of Consumer Affairs, Food & Public Distribution, not the Ministry of Agriculture [1].
• Chairman Ramesh Chand was a NITI Aayog Member 2015–2026 and a Member of the 15th Finance Commission [1].
• Committee members include the Joint Secretary (Legal Metrology), because weighment practices are part of the ToR [1].
• The trigger was farmers from Karnataka and Maharashtra [1].
• FRP 2026-27 = ₹365/qtl at a 10.25% basic recovery rate [2].
• Recovery premium for 2026-27 is ₹3.56/qtl per 0.1%; for 2025-26 it was ₹3.46 [2][3].
• There is no deduction for mills with recovery below 9.5% [2].
• Cost of production (A2+FL) for 2026-27 is ₹182/qtl, with FRP about 100.5% above it [2].
• The FRP is fixed under the Sugarcane (Control) Order, 1966, on CACP recommendation [9].
• The Sugar Price (Control) Order, 2018 set the sugar MSP at ₹29/kg [5].
• The sugar MSP was raised to ₹31/kg on 14 Feb 2019 [6].
• Violating the sugar MSP attracts penalties under the Essential Commodities Act, 1955 [6].
• Sugar season runs October–September, so FRP 2026-27 applies from 1 Oct 2026 [2].

8. Why Farmers Complain Even When Dues Are Mostly Paid

• The old problem was late payment. The new problem is a smaller bill.
• PIB says 99.5% of cane dues for the 2022-23 season, and 99.9% for all other seasons, have already been paid to farmers [17].
• So the farmer's main fear today is not that the mill will pay late. It is that the bill itself is smaller than it should be.

• Three of the committee's seven terms of reference are about measurement: recovery testing, weighing and deductions for machine-cut cane [1]. Arrears are not among them.

• A small change in the recovery figure cuts the farmer's price

• Recovery (the share of sugar taken out of the cane) is measured by the mill. The farmer is paid on that figure.
• Each 0.1% of recovery changes the price by ₹3.56/qtl [2].
• If the recorded recovery is 0.5 points too low, the farmer loses about ₹17.8/qtl. That is close to 5% of the ₹365 FRP. On a lorry load, this is real money.

• The ToR asks for transparent verification of recovery [1]. This suggests that today the farmer has no easy way to check the number.

• Machine harvesting has created a new kind of dispute

• Mills cut a share of the weight of machine-cut cane to allow for leaves, trash and lost juice.
• The ToR asks whether this cut matches the actual loss [1]. If the cut is larger than the real loss, the farmer is paid for less cane than they delivered.
• Cane also loses sucrose (its sugar) between cutting and crushing [18]. So a delay at the mill gate lowers recovery, and the farmer bears that loss too.

9. Two Prices Set by Two Systems, With No Link Between Them

• The cane price follows cost. The sugar price follows the market.
• The FRP is set from the farmer's cost of growing cane, on CACP advice [9][2].
• The mill's income depends on the price at which it can sell sugar. The only protection on that side is a floor price (the sugar MSP) [5].

• Nothing in law connects the two. One can rise while the other stays flat.

• When sugar prices fall, the mill stops paying the farmer

• A NITI Aayog report (March 2020) found that when sugar prices slump, mills build up arrears to farmers, and some farmers move to other crops [18].
• Each time this happened, the government gave a short-term rescue, such as the ₹7,402 crore soft loans in 2018-19 [7].
• These rescues end the crisis for that season. They do not fix the missing link between the two prices, so the crisis can come back.

10. What the Rangarajan Committee Proposed in 2012

• Share the money, don't fix two prices
• The Rangarajan Committee (2012) said the value made from cane should be shared 70:30 between farmers and mills [15][16].
• The same 70:30 ratio was to apply to money from the main by-products of sugar, not just sugar itself [15].

• The FRP would still be paid first, as a floor. If the farmer's 70% share came to more than the FRP, the mill would pay the difference later [15].

• Why this helps with arrears

• In bad years, the mill owes only the FRP floor, so its payment duty falls when its income falls.
• In good years, farmers share in the profit.

• The committee expected this to bring timely payments and fewer cane arrears [15].

• It also asked states to step back

• It said states should not declare a State Advised Price (SAP, a cane price some states fix above the FRP), because it adds cost for mills [15].
• This is a federal fault line. Any new pricing formula from the Chand Committee will need the cane-growing states to agree, and the ToR already says states must be consulted [1].

11. The Case Against Raising the Sugar MSP, and Where It Is Right

• The strongest objection
• The FRP rose from ₹285 to ₹365/qtl between 2020-21 and 2026-27 [4][2]. The sugar MSP has stayed at ₹31/kg since 2019 [6].
• Mills say the obvious fix is a higher sugar MSP.

• Critics reply that a higher floor price moves the cost onto every household and bulk buyer of sugar. It also protects weak mills that should become more efficient.

• What the critics get right

• Raising the MSP alone treats the symptom. Next year the FRP rises again, and the gap opens again.

• Fixing both prices by order is the very system the Rangarajan Committee wanted to replace with revenue sharing [15].

• Where the objection goes too far

• If the sugar floor stays frozen while the cane price keeps rising, the gap does not disappear. It returns as arrears, and then as government rescue money [7][18].
• So the real choice is not between a higher MSP and no change. It is between revising the MSP every year by formula and linking the cane price to sugar income. The committee's ToR, which asks for the MSP to reflect production cost, market price and mill viability, keeps both options open [1].

12. Why Any Price Increase Must Survive a WTO Ruling

• The WTO panel counted the FRP as farm support
• Brazil, Australia and Guatemala challenged India's sugar policies at the WTO (cases DS579, DS580, DS581) [19].
• India argued that it does not buy cane, so the FRP is not support. The panel rejected this. It held that market price support (support given by fixing a price above the world level) exists even if the government buys nothing [19].
• It found that India's support to cane exceeded the 10% de minimis limit (the support allowed without counting, equal to 10% of the crop's value) in every season from 2014-15 to 2018-19 [19].

• It also treated India's sugar export help as prohibited export subsidies and asked India to withdraw it [19].

• The ruling is frozen, not cancelled

• India appealed in January 2022 [20]. The WTO Appellate Body has no members, so the appeal cannot be heard. This is called an appeal "into the void".

• The ruling is not binding for now. But every FRP increase widens the support India would have to defend if the dispute system starts working again.

• Why this matters for the committee

• Making mills pay more through an order, or giving them cheap loans to pay, keeps the fight inside the WTO's scope.
• A revenue-sharing formula ties the cane price to what the market pays for sugar [15]. That is easier to defend than a higher fixed price.

13. Who Should Do What After the Report

• Department of Food & Public Distribution: link the two prices by formula
• It should revise the sugar MSP by a published formula each season, not by one-off decisions years apart. The MSP has not changed since 2019 [6].

• The 70:30 revenue-sharing model of the Rangarajan Committee is the ready reference [15].

• Legal Metrology wing and states: make weighing and testing checkable by the farmer

• The Joint Secretary (Legal Metrology) is a member because weighing scales are under that wing [1]. It should test mill weighbridges on a fixed schedule and publish the results.

• Recovery should be tested in a way farmers' bodies can verify, because ₹3.56/qtl rides on each 0.1% [2].

• Agriculture Ministry and CACP: replace the guessed deduction with a measured one

• The deduction for machine-cut cane should be based on field measurement of actual trash and losses, which the ToR already asks the committee to study [1].

• The Centre: keep the WTO case in mind

• Any new support should be designed with the 2021 panel findings in mind, so India is not exposed if the dispute is revived [19][20].

14. Anchors for Answers

• Data: 99.5% of cane dues for 2022-23 paid, which shows arrears have eased and the dispute has moved to measurement [17]
• Data: FRP rose from ₹285 to ₹365/qtl (2020-21 to 2026-27) while the sugar MSP stayed at ₹31/kg since 2019 [4][2][6]
• Data: each 0.1% of recovery = ₹3.56/qtl in 2026-27, so testing accuracy directly moves farm income [2]
• Report/Committee: Rangarajan Committee (2012): 70:30 revenue sharing between farmers and mills, FRP as floor, no State Advised Price [15][16]
• Report/Committee: NITI Aayog report on sugar (March 2020): low sugar prices lead to arrears and farmers shifting crops [18]
• Law/Case: Sugarcane (Control) Order, 1966 (FRP) [9]; Sugar Price (Control) Order, 2018 (sugar MSP) under the Essential Commodities Act, 1955 [5][6]
• Comparison: WTO panel, DS579/580/581 (2021): India's cane price counted as market price support above the 10% de minimis limit; India appealed into the void (2022) [19][20]
• Scheme: ₹7,402 crore soft loans to mills (2018-19), a one-season rescue that did not fix the price mismatch [7]

15. Mains Relevance

• GS-III: Agricultural pricing and MSP; farm subsidies; food processing industries; supply chain management; issues in agricultural marketing.
• GS-II: Government policies and interventions; statutory, regulatory and quasi-judicial bodies; Centre–state relations in agriculture.
• Possible question stems: 1. FRP keeps rising while the Minimum Selling Price of sugar has not changed since 2019. Examine how this mismatch causes cane arrears and suggest a sustainable pricing framework. 2. Transparent weighment and recovery testing matter as much to sugarcane farmers as the FRP itself. Discuss. 3. Mechanisation of harvesting brings new kinds of disputes between farmers and agro-processors. Examine with reference to the sugarcane sector.

16. Related Topics to Study Next

• CACP and the A2/A2+FL/C2 cost concepts. The FRP's margin over cost is calculated on A2+FL [2].
• Ethanol Blended Petrol Programme. Diverting cane to ethanol (B-heavy molasses or cane juice) affects mills' earnings and their ability to pay farmers.
• Essential Commodities Act, 1955. It is the enforcement backbone for sugar price and stock controls [6].
• Legal Metrology Act, 2009. It governs weighbridge calibration. This is not verified in the sources above; check independently.
• State Advised Price (SAP). Some states pay above the FRP. Not verified in the sources above.
• Sugar trade policy (TRQ, AAS, export quotas). It links domestic prices to global markets [11].
• Earlier sugar decontrol committees, such as the Rangarajan Committee (2012–13). It proposed a revenue-sharing formula. Not verified in the sources above.

17. NCERT Concepts to Revise

• Fair and remunerative price (Economy): FRP is the legal minimum cane price mills pay farmers, and is the centre of the committee's pricing review.
• State advised price (Economy): Some states set cane prices above the FRP, adding mill costs and raising a Centre-state pricing conflict.
• Legal metrology (Economy): Weighbridge calibration and inspection fall under legal metrology, which is why its Joint Secretary sits on the committee.
• Essential commodities (Economy): The Essential Commodities Act enforces the sugar minimum selling price, with penalties for mills selling below it.
• De minimis (Economy): The WTO panel found cane support above the 10% de minimis limit, which constrains further FRP increases.
• Appeal into the void (Economy): India appealed the WTO sugar ruling to a non-functioning Appellate Body, so the ruling is currently frozen.

18. Common Errors / Trap Areas

• Wrong ministry: the committee was announced by the Consumer Affairs, Food & PD ministry, while the Agriculture Ministry is only a participant [1].
• "MSP" confusion: here "MSP" means the Minimum Selling Price of sugar that mills receive, not the Minimum Support Price for crops. Sugarcane has an FRP, not a support-price MSP [1][5].
• Mixing up recovery thresholds: 10.25% is the basic recovery rate for the FRP, while 9.5% is the floor below which there is no deduction [2].
• Premium figures change by year: ₹3.46 for 2025-26 vs ₹3.56 for 2026-27 [2][3].
• Mixing up the two control orders: the 1966 order is the Sugarcane (Control) Order and covers cane price. The 2018 order is the Sugar Price (Control) Order and covers the sugar selling price [5][9].