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Maharashtra Sugar Mills pay first advance of Rs 450/tn more than FRP

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Maharashtra sugar mills, which contribute over 35 per cent to the total sugar production, are not affected by the controversy over the (FRP) and the subsequent ordinance issued by the Centre. Over 150 cooperative and 25 private mills in the state have paid Rs 800 a tonne more than the prevalent (SMP) of Rs 1,070 a tonne during the 2008-09 season.

For the current year 2009-10, the average first advance announced by the Maharahstra millers is Rs 450 a tonne more than the new FRP of Rs 1,575 a tonne. During 2008-09, the average final cane price paid by millers was Rs 1,850 a tonne, which was Rs 702 more than what was paid in the season 2007-08 (average final cane price was Rs 1,148 a tonne).

Prakash Naiknavare, managing director of Federation of Cooperative Sugar Factories in Maharashtra, which is a representative body of over 170 sugar cooperatives said: “As per the central government ordinance of October 22 statutory minim price (SMP) should be replaced by FRP. For base recovery of 9.5 per cent, new FRP announced is Rs 1,298.40 a tonne while for every additional 1 per cent of recovery, additional rate of Rs 136.67 a tonne has been announced. Based on Maharashtra’s 2008-09 average recovery of 11.52 per cent, the state’s new FRP for 2009-10 would be Rs 1,575 a tonne. This rate is on gate-delivery basis, which includes harvesting and transport expenses. Maharashtra’s new FRP is almost 46 per cent more than the last year’s SMP of Rs 1,077 a tonne.”

Naiknavare reiterated that cane growers of Maharashtra had always got a price over and above SMP. He informed that due to existing ex-mill sugar price of Rs 3,165 a quintal for S-30 and Rs 3,275 a quintal for M-30, the cane growers are expected to go in for larger plantation of cane during the current year. He informed that the Maharashtra government and the Federation have decided to launch a massive drive to increase the sugarcane production to 97 tonne per hectare from the present level of 63-65 tonne per hectare. Tamil Nadu currently produces 105 tonne per hectare.

Meanwhile, by the end of 2009-10 season, Maharashtra would have a sugar production of 4.8 million tonnes by crushing 41 million tonnes of sugarcane. However, in 2010-11, the state government and estimate the production to be 6 million tonnes by crushing 52.5 million tonnes of sugarcane.

Further, the state government has decided to sell 31 loss-making 31 units. Their net loss is estimated at Rs 850 crore. So far, the (MSCB), which is the leading bank for providing loans to these mills, has sold out seven mills under the Securitisation Act.

The sale process for the balance 24 has also been launched by the MSCB. Naiknavare informed that the decision has been taken to wipe out “deadwood” and concentrate on strengthening mills which have the potential to increase sugar production.

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