The ongoing sugar season has turned bitter for the sugar mills in Maharashtra. The State Government has threatened them with punitive action if they don’t pay the Fair and Remunerative Price (FRP) to sugarcane growers. Notices have already been issued to some 119 mills in the State.
The FRP is the benchmark price set every year by the Centre. This year, the price has been set at ₹2,641 per tonne of sugarcane but mills in Maharashtra are saying that they are unable to pay the price because of bearish market conditions and glut in the international market.
Penal measures
Maharashtra’s Minister for Cooperation Chandrakant Patil said that State Government could seal the warehouse of sugar factories in the next seven days and auction the sugar so that the FRP can be paid to the growers.
Farmers are supported by Swabhimani Shetkari Sanghatana leader and Member of Parliament Raju Shetti. He told BusinessLine that the mills cannot simply evade from their responsibility of paying FRP to the farmers.
“The State Government is intervening in this matter and in two days some solution will have to be worked out,” he said.
Since the sugarcane season began in October, 174 sugar factories have crushed about 39.7 million tonnes of sugarcane to produce four million tonnes of sugar.
Maharashtra has also decided to waive sugarcane purchase tax worth ₹875 crore.
Cooperation Secretary of Maharashtra SK Sharma said that law is very clear on the payment of FRP.
Union Minister of State for Food and Public Distribution Raosaheb Danve said the country has carryover stocks of about 70 lakh tonnes of sugar. Along with that, this year’s production stands at about 250 lakh tonnes. In effect, while supply is about 320 lakh tonnes the country’s consumption is 240 lakh tonnes.
Surplus stock Therefore, there is surplus stock in the market. To add to it, there is excess production in the international market too.
Therefore, mills will have to export sugar for which they will require a subsidy of ₹4,000 subsidy per tonne.
“I have spoken to the Chief Minister and soon we will be meeting the Union Finance Minister for a solution,” he said.