Cooperative sugar mills in Maharashtra are demanding a bailout package from the state government to the tune of the total fair and remunerative price (FRP) arrears owed by the mills to farmers. The total arrears owed by millers to farmers in the state come up to some R3,800 crore. Though the Centre has announced a soft loan package of R6,000 crore to sugar mills across India, of which R1,850 crore comes Maharashtra’s way, this amount is not enough to resolve issues faced by mills, say top officials of the Maharashtra State Cooperative Sugar Factories Federation (MSCSFF).

“Sugar prices have fallen to R21-22 per kg as on date from from R35-36 per kg during the same time last year, as a result of which mills are not in a position to recover the cost of production. The loan package announced by the Centre is not enough. The mills are not able to make FRP payments to farmers and the shortage of funds has also impacted other bills. Through the sale of sugar, millers will be able to raise another R1,000 crore. Therefore, it is important that the government takes care of the entire amount for the survival of the industry,” Shivaji Nagawade, the new chairman, MSCSSF, said. At a meeting of the millers held in Mumbai, the federation has decided to approach chief minister Devendra Fadnavis and have sought time. He said a loan package will not resolve issue and assistance is required in the form of a grant.

Jayprakash Dandegaonkar, vice-chairman of the federation, pointed out that FRP payments for February and March last year were still being made by mills. The federation has sought meetings with the CM time and again and met the state cooperation minister for just 10 minutes. “The government has to intervene for the survival of the industry. Maharashtra, especially Marathwada, is reeling under the effects of a drought. Around 2,200 lakh hectares in Marathwada region is under cane. The government should ensure there is enough water at least to process this cane so that the mills do not remain shut in the coming season,” he said.

“Alongside FRP payments, mills also have to take care for wages of workers, transport in addition to other maintenance charges for opening the mills for the new season. Moreover, the government, through market borrowings, gives loans to mills, the installments of which are due soon in addition to the excise loan scheme. Together, the mills owe Rs 1,200 crore through both these schemes,” he said. Most factories are facing losses to the tune of Rs 5-10 crore, he added. Sanjeev Babar, MD of the federation, confirmed that millers have been demanding a package from the government. “Last month, the federation had met in Pune to suggest both short-term and long-term measures for the survival of the industry. However, there has been no discussion from the government on this,” Dandegaonkar pointed out.

Last week, at least 52 sugar mills in Marathwada region in Maharashtra that has been reeling under the effects of a drought had expressed their inability to undertake crushing operations in the coming sugar season. The mills had urged the state government to run the mills since these lack the wherewithal to both raise funds and also make farmer payments. A decision to this effect was taken at the joint meeting of the Maharashtra State Cooperative Sugar Factories Federation and the Western India Sugar Mills Association at Aurangabad.