FRP and state administered price (SAP) are prices set by the different governments at which mill-owners will reimburse farmers. This is the minimum price they pay to the farmers for the sugarcane. Under FRP, the Centre decides the price, but it is not binding, while SAP is the price fixed by states to be paid to farmers; generally, SAP is higher as sugarcane farmers are seen as a large vote bank.
Palani G Periasamy, president, The South Indian Sugar Mills Association, said, the revenue sharing formula would alleviate the fundamental difficulty of farmers getting the remunerative price.
Abinash Verma, director general, Indian Sugar Mills Association, agreed. Under the new system, farmers would know what they are going to get, while mills would know what they were going to pay, he said, adding the state could play the role of a facilitator.