Maharashtra has decided to suspend crushing licences of 12 sugar mills in the state for their failure to pay fair and remunerative price (FRP) arrears for the 2014-15 season. The licences of another 7 factories have also been suspended for their failure to pay the dues to the Chief Minister’s Fund at the rate of Rs 3 per tonne, top officials said.

These mills will also be fined Rs 500 per tonne if they continue to crush cane, the officials said. Significantly, 13 sugar mills that have not been granted permission by the State Sugar Commissionerate to crush cane will be issued revenue and recovery certificate notices this week for their failure to pay up FRP dues, said Vipin Sharma, Maharashtra sugar commissioner.

This is perhaps the first time that such stern measures are being taken by the government. Sugar mills in Maharashtra have been struggling to pay FRP dues since the last season after the fall in sugar prices and the 12 factories still owe the farmers dues to the tune of Rs 200 crore. According to the commissioner, as on December 31, 2015, the arrear position was around Rs 328 crore and this is likely to come down to Rs 200 crore by January 10 since the mills have begun paying up.

These mills had filed affidavits at the start of the season that they will complete FRP payments for last season ( 2014-15)  within one month of the start of crushing for the 2015-16 season and have failed to comply with these conditions because of which strict action is being taken by the State Sugar Commissionerate, officials said.
Last year, the total cane arrears amounted to Rs 19,120 crore of which mills have paid R18,880 crore till the end of December, he said. For the season of 2015-16, cane worth Rs 5,000 crore has been crushed and as per the 80:20 FRP formula decided at the CM meet, around Rs 4,000 crore were due to farmers, Sharma said.

These mills have paid Rs 2,600 crore, which is around 65% of the FRP component, he said. Interestingly in the ongoing season, FRP payments did not start until December 20, 2015 because of the lack of clarity between the mills and the state. Only Rs 29 crore was paid by mills until December 20 for the current season and after the decision of the 80:20 FRP formula, some Rs 2,600 crore were paid by mills in just a fortnight, he said.