FRP to cane growers: Maharashtra not to license defaulting sugar factories

Sugar factories owe nearly Rs 3,148 cr towards FRP to cane growers; state urges Centre to increase sugar import duty to 40%

The government in Maharashtra has decided not to provide a licence to operate for the next cane crushing season (starting October) to sugar factories which do not pay farmers at the fixed Fair and Remunerative Price (FRP).

Factories as on date owe Rs 3,148 crore to cane growers. The office of the sugar commissioner has started revenue recovery procedures against 38 factories. In Maharashtra, the FRP for 9.5 per cent recovery of sugar from cane is Rs 2,200 a tonne. There will be a rise of Rs 232 a tonne in FRP for every one per cent rise in recovery.

Cooperatives minister Chandrakant Patil told Business Standard: ''The government has already announced an interest-free loan of Rs 2,000 crore so that factories can make the FRP payment. If it is found that factories divert the loan amount, they will not get a licence to operate in the next season.''

He said the government would request the Centre to direct Food Corporation of India to procure nearly 2.5 million tonnes across the country. Of this, 800,000 to 900,000 tonnes can be lifted from Maharashtra, which will generate Rs 3,500 crore. \"That money can be used by sugar factories to repay the loans taken by them in the past to pay FRP and thereafter stay afloat.''

Patil said in a detailed memorandum to the Union finance finance minister, the state government has also appealed to the Centre to increase the import duty on sugar to 40 per cent from the present level of 25 per cent, and to create a buffer stock of five million tonnes.

He said Maharashtra had so far produced a record 10.1 million tonnes. A government official said factories have said the falling price of sugar had adversely impacted their balance sheet and they were not in a position to pay the FRP. He said distress sales by factories were also responsible for the price fall.