FRP Dispute Escalates to Supreme Court Amid Ongoing Controversy

The contentious issue of Fair and Remunerative Price (FRP) payments for sugarcane in Maharashtra has reached the Supreme Court, as the state government challenges a Bombay High Court ruling that struck down its two-installment payment system. The Maharashtra government has filed a Special Leave Petition (SLP) seeking a final resolution to the dispute, which has significant implications for sugar mills, farmers, and the national sugarcane industry.

Background of the Dispute

In March 2025, the Bombay High Court declared Maharashtra’s two-instalment FRP payment system, introduced in February 2022, null and void. The court ruled that sugar factories must pay the entire FRP in a single lump sum within 14 days, in accordance with the Sugarcane Control Order, 1966. The verdict aligned with the central government’s mandate, prioritizing farmers’ rights to timely and complete payments. However, the state government’s appeal to the Supreme Court signals ongoing tensions between financial constraints faced by sugar mills and farmers’ demands for prompt payments.

Stakeholders’ Perspectives

The dispute has sparked contrasting views from key stakeholders:

• Sugar Industry: Mill owners argue that paying the full FRP in one lump sum imposes significant financial strain, particularly amid low sugar prices and fluctuating market conditions. Many mills claim the two-installment system offered operational flexibility.

• Farmers’ Organizations: Farmer groups have hailed the High Court’s decision, asserting that the two-installment system often led to delayed payments, violating their legal right to receive the full FRP promptly.

Current Status and National Implications

Until the Supreme Court rules on the SLP, the Bombay High Court’s verdict remains in effect, compelling sugar mills in Maharashtra to comply with the lump-sum payment directive. The outcome of the Supreme Court case is anticipated to set a precedent for FRP payment protocols nationwide, potentially reshaping how sugarcane payments are handled across India’s sugar industry.

Clarification Adds to Confusion

On August 13, 2025, the Directorate of Sugar & Vegetable Oils issued a clarification on FRP payments, reiterating that payments must adhere to Para 3(1) and 3(3) of the Sugarcane Control Order, 1966, based on recommendations from the Commission for Agricultural Costs and Prices (CACP). However, the clarification has failed to resolve critical ambiguities, particularly regarding the calculation of lump-sum FRP payments when sugar recovery rates fall below benchmark levels.

The lack of clear operational guidance has left sugar mills uncertain about whether to base calculations on actual recovery, benchmark recovery, or data from the previous season. This ambiguity risks fueling further disputes and payment delays between mills and farmers, exacerbating tensions in the sector.

Call for Clarity

Industry experts and farmer representatives are urging the Ministry of Consumer Affairs, Food and Public Distribution to issue a comprehensive and detailed clarification to ensure consistent and fair implementation of FRP payments. Without clear guidelines, the ongoing uncertainty threatens to disrupt the delicate balance between supporting farmers’ livelihoods and maintaining the financial viability of sugar mills.

As the Supreme Court prepares to hear Maharashtra’s appeal, all eyes are on the judiciary to deliver a ruling that could bring much-needed clarity to this decades-long dispute and shape the future of India’s sugarcane industry.

(Writer Dilip Patil is Co-Chairperson of Indian Federation of Green Energy and rtd MD of Samarth Sugar)

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