Times Of India- 9 July 2015, Kolhapur: The sugarcane crisis is likely to fester with the sugar commissionerate’s plan to issue seizure notices to sugar factories, which have not paid the fair and remunerative price (FRP) for the last crushing season. None of the sugar factories in Kolhapur and Sangli districts have paid the FRP fixed at Rs 2,200 a tonne for sugarcane crushed in 2014-15.
The factories paid the FRP for the sugarcane till February this year, but later failed to clear the final bills of the farmers due to excessive sugar production. Almost all 166 sugar factories in the state, including private enterprises, have struggled to pay the FRP this season. The factories have paid Rs 12,000 crore to the farmers for the 2014-15, but still have to pay Rs 3,000 crore.
In Kolhapur district, sugar factories have not paid Rs 575 crore to the farmers for their sugarcane crushed since February. The season official ended on June 10 and the bills for the last four months are pending. Similar situation prevails in Sangli, where factories owe Rs 300 crore to the cane growers.
As per the FRP, the 23 factories in Kolhapur were expected to pay around Rs 4,000 crore to the farmers and the Sangli factories had to give Rs 3,500 crore. The state sugar commissionerate has sought reports from the divisional commissioners about the factories that have not paid bills as per the FRP.
“We have submitted a proposal to seize the sugar available in the defaulter factory’s godown. None of the factories in the region had paid the FRP and we have proposed to sell the sugar to raise the funds to be transferred to the farmers’ accounts,” Y V Surve, regional deputy director of sugar commissionerate, told TOI.
The Indian Sugar Mills Association said there has been surplus sugar production for the fifth consecutive year. Sugar prices, both in domestic and global market, have fallen to the lowest levels in a decade. This has worsened the financial health of the sugar industry, due to which banks are not coming forward to lend further loans, the association said.
Factories already reeling under falling sugar prices were unfazed by the commissionerate’s action. Sugar industry experts said it would be extremely difficult for the factories to pay the FRP, when the sugar prices were hovering around Rs 1,900 per quintal.
“No private and cooperative sugar factory can pay the FRP at this moment. The FRP is Rs 2,200 and sugar recovery is high, which means factories have to pay Rs 2,400 to Rs 2,500 per tonne for the sugarcane. At the same time, we are selling sugar at Rs 1,900 per quintal. Factories are facing losses of Rs 250 to Rs 600 per tonne to pay the FRP,” said P G Medhe, expert director of the Rajaram factory.
The forthcoming season, starting from September this year, could be disaster for the factories. “With the present loans and other dues, factories may be able to pay Rs 960 per tonne of sugarcane. This is the reality and the government has to find a way out,” he added.
Farmers’ outfit, Swabhimani Shetkari Sanghtana (SSS), has been demanding FRP payment blames the factories for the crisis. “I agree that there is crisis this year. However, these factories have been operating for 50-60 years and making profit. Why don’t they spend something now when the farmers are in trouble,” asked SSS leader Sadabhau Khot.