A majority of sugar mills in Maharashtra have expressed inability to pay the Fair and Remunerative Price (FRP) as per directives of the Centre as first cane installment to farmers on the back of a sharp fall in sugar prices.

As legal notices continue to be issued over non-payment of FRP, several mills have given undertakings to the sugar commissionerate agreeing
to pay up 15% interest as per the Cane Control Order of 1966, senior officials at Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) said. Some mills have said they will be unable to pay FRP, Sanjiv Babar, MD of the federation, said.

Notably, Pankaja Munde, minister for rural development, said her factory will be unable to make FRP payment to farmers at the Winter session.
The federation wants CM Devendra Fadnavis to lead a delegation to the PM in this regard.

The state government has ordered mills to pay the mandated price for cane. State cooperatives minister Chandrakant Patil warned that the board members of cooperatives that fail to pay farmers would be arrested.

According to Babar, the majority of mills have made cane payments well below the FRP. The FRP for 9.5% recovery has been fixed at R2,200 a tonne and there will be a rise of R232 a tonne for every 1% rise in recovery.

For 11% recovery, FRP comes to R2,650 a tonne. Mills in Solapur, Latur and Ahmednagar have paid R1,500 per tonne while Pune mills are paying R1,800 per tonne as FRP, he said.

“Sugar prices are falling. The government should take note of the fact that, unlike Karnataka which has cane arrears to the tune of R1,752 crore, and R6,000 crore in

Uttar Pradesh, Maharashtra has had no history of arrears, This should be appreciated and, unless the government intervenes, Maharashtra will find itself in the same state as Uttar Pradesh and Karnataka,” he said. Maharashtra mills pay R2,000 crore taxes and R3,000 crore to the Centre in terms of revenue, he added.

The federation has therefore approached the Centre for a bailout package.

NCP leaders are demanding a bailout package from the state to facilitate payment of FRP.

As on date, 20.2 million tonne of cane has been crushed, for 2.03 million tonne of sugar. The state has estimated sugar production of 8.8 million tonne as compared to 7.6 million tonne last year.

In a letter to PM Narendra Modi, the federation of mills has demanded subsidies to the tune of R700 per tonne after the sudden fall in prices. Data available from the Indian Sugar Mills Association suggests sugar prices in the state have fallen from R2,964 per quintal in October to R2,750 a quintal in December. Such levels were last seen in 2011, Vijaysinh Mohite Patil, chairman of the federation, said.

Industry estimates suggest total sugar output this month amounted to 4.23 million tonne as compared to 2.9 million tonne last year.

Maharashtra’s co-operatives are also demanding that the government provide incentives for exports of the sweetener in addition to subsidy for domestic sale.