India’s Draft Sugarcane Control Order 2026 Raises Concerns Over FRP Calculation and Cost of Production

01 May 2026, New Delhi: The All India Kisan Sabha (AIKS), one of India’s largest farmers’ unions, has strongly opposed the draft Sugarcane (Control) Order, 2026, released by the Ministry of Consumer Affairs earlier this month. The organisation has termed the proposed policy framework “anti-farmer” and “pro-corporate,” warning that it could significantly alter revenue distribution in the sugar sector at the cost of farmers.

AIKS has urged the government to withdraw the draft before the public consultation deadline of 20 May 2026, failing which it has warned of a nationwide agitation, including a proposed “chakka jam” across sugar-producing regions.

Leadership Voices Strong Concerns

Ravula Venkaiah, General Secretary of AIKS, criticised the draft as a continuation of outdated regulatory structures, arguing that it retains the core framework of the 1966 control order while introducing provisions that, according to the organisation, favour corporate sugar mills.

Meanwhile, Rajan Kshirsagar, President of AIKS, emerged as the key voice articulating the farmers’ concerns. He highlighted that the draft fails to incorporate comprehensive cost calculations for sugarcane pricing and excludes revenue streams from by-products such as ethanol and power generation.

Key Issue: FRP Calculation and Cost of Production

At the centre of AIKS’ criticism is the method used to determine the Fair and Remunerative Price (FRP) for sugarcane. The organisation argues that the draft excludes the comprehensive C₂ cost of production, which includes all input costs, imputed family labour, and land rent.

According to AIKS, while the Commission for Agricultural Costs and Prices (CACP) estimates FRP at ₹355 per quintal (at 10.25% recovery), the C₂ cost is estimated at ₹268 per quintal, rising to ₹274 after adding transport and insurance. Applying the Swaminathan Formula (C₂+50%) would imply a price of approximately ₹411 per quintal.

AIKS claims that the current framework results in a substantial income gap for farmers, translating into significant per-hectare losses.

Exclusion of By-product Revenues

A major concern flagged by AIKS is Clause 3 (Explanation 5) of the draft order, which excludes revenues from ethanol, co-generated electricity, and bio-fertilisers from FRP calculations.

The organisation argues that this provision allows sugar mills and corporate players to retain profits from high-value by-products without sharing gains with farmers. AIKS has demanded a legally binding Revenue Sharing Formula (RSF), proposing that 75% of the net realised value from sugar and all by-products be paid to farmers within 30 days.

Distance Norms and Market Competition

AIKS has also opposed the proposed increase in the minimum distance between sugar mills from 15 km to 25 km under Clause 6A. According to the organisation, this change could create monopolistic zones, limiting farmers’ ability to choose buyers and weakening their bargaining power.

Farmers, AIKS argues, may be forced to sell to the nearest mill regardless of payment delays or pricing disputes.

Payment Delays and Enforcement Gaps

Despite an existing 14-day payment rule, AIKS highlighted that sugarcane dues reportedly reached ₹16,087 crore as of February 2026. The organisation alleges that enforcement mechanisms remain weak, with interest penalties rarely implemented.

AIKS has demanded stricter provisions, including automatic attachment of mill bank accounts in case of delayed payments and criminal liability for mill management.

Other Structural Concerns Raised

AIKS has outlined several additional issues in the draft order:

• Lack of effective enforcement mechanisms for khandsari and jaggery units, which account for a significant share of sugarcane utilisation
• Broad and undefined provisions allowing deductions for cane quality, without independent verification
• Exemption granted to standalone ethanol units from performance guarantees
• Absence of regulatory oversight on harvesting and transportation costs
• No enforceable timelines for cane crushing after harvest
• Lack of transparent systems to verify sugar recovery rates

Rangarajan Committee Recommendations Ignored

AIKS has also criticised the draft for moving away from the recommendations of the Rangarajan Committee, which had proposed a revenue-sharing model, removal of distance restrictions, and sectoral reforms aimed at improving farmer remuneration.

According to the organisation, the draft selectively retains regulatory controls while discarding farmer-beneficial provisions.

AIKS Demands Ahead of Deadline

AIKS has put forward a set of demands to be addressed before the consultation deadline, including:

• Linking FRP to C₂ cost (₹411/quintal benchmark for 2025–26)
• Implementing a legally enforceable revenue-sharing mechanism across all by-products
• Ensuring strict compliance on payment timelines with penalties
• Regulating deductions and ensuring third-party verification
• Strengthening enforcement for khandsari units
• Preventing forfeiture of unclaimed farmer dues
• Introducing accountability in harvesting, transport, and recovery measurement

The organisation has also called on farmers to formally submit objections to the Ministry before 20 May.

What AIKS Wants: A Shift to Farmer-Centric Policy

In essence, AIKS is advocating for a structural shift in India’s sugarcane policy—from a price-based system controlled by mills to a revenue-sharing model that aligns farmer income with the full value chain of sugar and its by-products.

The organisation argues that without such reforms, the draft order risks deepening financial stress among sugarcane farmers while enabling higher margins for industrial players.

With the consultation deadline approaching, the government’s response to these concerns will be closely watched by stakeholders across the sugar sector.

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