The Commission for Agricultural Costs and Prices has recommended the Centre allow sugar mills across the country to stagger the payment of the fair and remunerative price of sugarcane across three instalments starting 2022-23 (Oct-Sep), two senior government officials told Informist.

Under the current provisions of the Sugarcane (Control) Order, mills are supposed to make the payment for sugarcane to farmers within 14 days from the date of delivery of cane.

The panel has suggested that 60% of sugarcane payment can be done within 14 days, another 20% within the next 30 days and the rest can be paid in the following 30 days.

"The entire payment process will be completed within three months. This will be strictly enforced and failure to complete payment within three months may attract penal interest rate at the rate of 1% per month," one of the officials said, citing the report of the commission.

Earlier, Maharashtra and Karnataka were following the practice of staggered payment, but currently, only mills in Gujarat are making payment in three instalments.

Mills are unable to make full payment to sugarcane farmers within 14 days as the realisation from sugar sales is staggered throughout the year.

Sugar mills have to borrow loans from banks to make payments on time, which leads to high-interest rates. This burdens mills financially leading to a pile-up of huge cane arrears.

A year ago, NITI Aayog had also recommended staggered payment of the fair and remunerative price of sugarcane.

India is the world's second-largest producer of sugarcane, after Brazil.  End