Sugar mills in Maharashtra have begun crushing after the decision of Kolhapur-based Swabhimani Shetkari Sanghatan (SSS) to call off its agitation for higher cane purchase prices.

However, some ambiguity continues to remain over the agreed price of R2,650 per tonne. On Thursday, a sugar cooperative from Kolhapur after a meeting with SSS leader Raju Shetty declared a first advance of R2,650 a tonne. A final decision regarding the first advance is expected to be taken on December 6 in Delhi when a meeting is expected to be held between Union agriculture minister Sharad Pawar and Maharashtra chief minister Prithviraj Chavan.

Kolhapur MP Shivajirao Mandalik had agreed to pay this amount to farmers in two instalments, an immediate payment of R2,200 per tonne and the remaining after a couple of months. Although Shetty had agreed to Mandalik’s proposal for his factory, he is firm that the government should intervene and ensure that farmers get a one time first advance of R2,650 per tonne failing which the factories could take the cane from farmers for free. Shetty said his organisation would wait till December 31 for the payment. If factories do not get payment by then, a fresh agitation would be launched in January next year, he said.

Meanwhile, around 125 factories in the state have begun crushing operations and have crushed around 65.31 lakh metric tonnes, resulting in a production of 5.79 lakh metric tonnes. Last year, around 155 factories had commenced operations at the same time crushing 112.38 lakh metric tonnes, resulting in a production of 10.07 lakh metric tonnes.

Officials at the Maharashtra State Sugar Cooperative Factories Federation pointed out that mills in the state would find it difficult to make a payment of R2,650 per tonne. Banks would lend an advance of R1,530 per bag and processing cost of R250 per tonne which comes up to R1,780 per tonne. Added to this is a production cost of R800 per tonne. Therefore mills will have to shell out the remaining amount from their own sources, officials said.

According to Shetty, the Centre is expected to provide an excise arrears of R99 per tonne for a period of three years for cooperatives in the state in addition to removing controls on molasses and scrapping the purchase tax of R15 per tonne in the next few days after Pawar presents his report. He said that it should therefore not be difficult for factories to make this payment.

SSS, along with other organisations, had launched an agitation a month ago, demanding higher cane payment. Shetty had sought R3,000 a tonne, while the Shetkari Sanghatana, led by Raghunath Dada Patil, sought R3,500 a tonne. However, factories expressed inability to do so, citing the prevailing sugar price of R2,600-2,650 a tonne.