Maharashtra sugar mills deal 'crushing' blow; FRP a bitter pill

State govt will continue to act against erring sugar mills

Despite the ultimatum served by the Bharatiya Janata Party (BJP)-led government in Maharashtra, the sugar mills have expressed their inability to pay the fair and remunerative price (FRP) worth Rs 3,000 crore to the cane growers.

Instead, sugar mills are prepared to take on the government on this issue. A section of cooperative and private sugar mills, which met on Tuesday in Pune, has decided to launch a statewide agitation demanding relief from the Centre and the state government. They also plan to protest against the state government’s action to attach their properties due to default in FRP payment.

However, State Cooperation Minister Chandrakant Patil announced the government’s ongoing move against erring sugar mills will continue as it is mandatory for them to pay FRP to cane growers.

Maharashtra’s former Chief Minister Prithviraj Chavan in a blistering attack alleged that the state government was bent on demolishing the cooperative sugar sector in Maharashtra. He made a strong case to amend the FRP model by revenue sharing model suggested by the Rangarajan panel. He admitted that due to drastic fall in sugar price, a majority of the mills is not in a position to pay FRP and thereby liable to penal action.

However, he demanded that the Centre should waive loan of Rs 2,150 crore of state sugar mills, which is the part of the Rs 6,000 crore interest free loan announced by the UPA government. Further, the Centre also write off Rs 1,850 crore loan to state mills that are entitled to the loan under the Rs 6,000 crore scheme announced recently by  the Centre.

BJP leader and former state minister Babanrao Pachpute told Business Standard, “Slide in sugar price is a major concern. When the FRP was fixed the sugar price was reported at Rs 32 per kg, which has fallen to Rs 19 per kg. In such a situation, sugar mills are not in a position to pay FRP.”



He said for the crushing season 2015-16, the FRP is fixed at Rs 2,300 per tonne for 9.5 per cent recovery. Bank valuation for sugar stands at Rs 1,950 per tonne and hence, millers cannot make payment more than Rs 950 per tonne for sugarcane.  

Nationalist Congress Party legislator and former state minister Jayant Patil painted a bleak picture for the sugar sector saying that mills are unable to clear their sugar stock when the price crashes.

There is no response for the tenders, he noted. Patil sought immediate intervention by the Centre and the state government to provide a much-needed relief to the sugar sector.

A representative of Western India Sugar Manufacturers Association demanded that the Centre needs to move an amendment whereby the gap between FRP and revenue sharing price - if it is less - be paid by the government directly to farmers as recommended by the Commission for Agricultural Costs & Prices.

BITTERSWEET NEWS

• Sugar mills in Maharashtra express inability to pay FRP to cane growers amid falling prices
• They fear a large number of them won't participate in crushing season for 2015-16 due to deteriorating finances
• FRP for current season is fixed at Rs 2,300 per tonne for 9.5% recovery
• Bat for relief from the Centre and state to survive
• However, state government is bent on action against defaulting mills