Even as sugar prices are improving and the fair and remunerative price (FRP) arrears for the sugar season of 2014-15 and 2015-16 in Maharashtra have come down, sugar mills still owe farmers some R241 crore for the previous season and R1,000 crore under the 80:20 formula for the ongoing season, top officials of the Maharashtra Sugar Commissionerate said. Another round of hearings has been called by the commissionerate on March 11 to assess the payment position of mills in the state, where some tough decisions are expected. The Maharashtra State Cooperative Bank (MSCB) has, meanwhile, raised sugar valuations to R2,765 per tonne with effect from March 1, 2016 from R2,665 per tonne, a rise of R110 per tonne, the highest this so far season.
The priority would be to hear mills for the season of 2014-15 and the conclusion of the hearing of Aurangabad mills involved in the writ petition is also likely, so that a decision can be taken, Vipin Sharma, Maharashtra Sugar Commissioner, told FE. Senior officials at the commissionerate said that while action is likely against mills which continue to default for the previous year’s season, the government has also decided to call large defaulters of the season of 2015-16. Some 40 mills that have arrears above R1 crore have been summoned for hearings on March 11.
According to the latest report, the FRP amount for the 2015-16 season comes to R1,2707 crore, of which R9,179 crore has been paid; this leaves some R3,530 crore. Around 72% of the total FRP of R12,707 crore has been paid, officials said. The sugar commissionerate, meanwhile, has decided to reinstate three more crushing licences of factories after receiving reports of clearance of FRP dues to farmers. Sharma had said that five licences were reinstated earlier and three more will be reinstated soon.
The decision of MSCB to hike sugar valuations to R2,765 per tonne is expected to give a fillip to FRP payments. According to Pramod Karnad, MD, MSC Bank, the average rate of sugar prices had moved up to R2,800 per tonne, which is why the bank had decided to raise valuations. A hike of R110 per tonne is the highest this season so far, he said. The current prices of sugar are around R3,035 per tonne. Last month, valuations were around R2,655 per tonne, which means the pledge rate is around R2,350 per tonne from R2,255 per tonne in the previous month. Mills now have R1,600 per tonne in hand as compared to R1,505 per tonne last month as per the 85% formula and as per the new scheme of 90%, mills will have R1,740 per tonne in hand for cane payments, Karnad said.