KOLHAPUR: The Rs 1,982.97 crore financial assistance announced by the state government to the sugar factories will still leave a gap of Rs 1,400 crore arrears with the units. The sugar factory managements have claimed that they are clueless about the ways to raise the funds to make the payments to farmers. If the factories fail to make the payment, it will reflect in their accounts books and create a problem while seeking pre-seasonal loan from the local lending bank at the start of the new crushing season. Sanjeev Babar, managing director of Maharashtra State Federation of Cooperative Sugar Factories Ltd, said "The arrears to sugarcane cultivators in the state are Rs 3,300 crore. The state government will share the load of Rs 1,900 crore and the remaining Rs 1,400 crore will have to be borne by the factories. This is a bit worrisome."
Though the state government has promised to pay Rs 1,982.97 crore, the actual payment will be around Rs 1,800 crore because some factories have made their entire payment of fair and remunerative price to the farmers. These factories will not get money through the scheme, Babar said.
The state government has selected 148 cooperative and private sugar factories in the state for its financial assistance scheme. The factories that were not selected in the scheme had not crushed sugarcane in the 2013-14 crushing season. Babar said that 14 of the 148 sugar factories have paid its FRP completely and will not be able to claim financial assistance. "In many cases, the sugar factories have got additional sanctions of assistance but the actual arrears are less. Hence, these factories will get the amount equal to arrears rather than the sanctioned amount," he said. Kolhapur MP Dhananjay Mahadik said, "The Centre and the state government are not providing financial assistance to the factories whole heartedly. Instead of solving the problem completely, they have given aid that is not satisfactory. The government should have acted in December 2014 but instead it took decisions in March. The raw sugar export subsidy, which was as high as Rs 5,000 per tonne, could not make an impact because of the late decision." When asked about earnings through bi-products, Mahadik said, "Not even 20% sugar factories in the state have cogeneration and ethanol producing plants. Such machinery needs huge investment which factories cannot afford." He added that the returns from sale of power and ethanol are received on annual and contract basis respectively; hence it was not useful for the factories to make urgent payment to farmers. It is not even useful to farmers, because their future plans and cultivation is based on the payments from factories. Compared to it, molasses has more demand, but it needs huge amount of sugarcane for crushing. For one tonne of molasses production, the factory needs to crush at least 12 tonne of sugarcane. And molasses is produced only after sugar production; hence factories will have to produce sugar that does not have demand in domestic as well as international markets, Mahadik said. A state government resolution issued on July 30 has clarified that the financial assistance will continue only if the sugar factories continue to make the mandatory payment of fair and remunerative price to farmers in time. If a factory fails to do so, the state will stop paying its interest and the factory will have to bear the cost of interest. The factories paid the FRP for sugarcane till February this year, but later failed to clear the final bills of the farmers due to excessive sugar production and consequent fall in prices. Almost all the 178 sugar factories in the state, including private ones, have struggled to pay the FRP this season.