Maha sugar factories asked to pay FRP to cane growers by Feb 28

Revenue recovery proceedings will be initiated if they fail to pay up

Maharashtra’s cash-strapped sugar sector has got a breather with the state sugar commissioner asking 148 sugar factories to pay the fair and remunerative price (FRP) to cane growers by February 28. If they fail to pay up, revenue recovery proceedings will be initiated against them by the respective district collectors to attach sugar stored in their godowns and auction it subsequently.

In the state, FRP for 9.5 per cent recovery is Rs 2,200 a tonne and there will be a rise of Rs 232 a tonne for every one per cent rise in recovery. For 11 per cent recovery, FRP comes to Rs 2,650 a tonne. Some sugar mills at Pune, Sangli-Satara, Kolhapur, Ahmednagar have paid the first instalment of Rs 1,500-2,150 a tonne to cane growers and have agreed to pay the remaining FRP soon with 15 per cent interest after they get a bailout package from the Centre.

Of the 176 sugar mills in the state, only 26 have paid FRP in the current crushing season, which began on November 1, 2014. The remaining have expressed their inability to pay FRP citing financial constraints owing to the mismatch between the cost of production of Rs 3,300-3,400 a quintal and the ex-mill sugar price of Rs 2,460 a quintal.

Of the state's factories, 99 are cooperative and 77 are private mills, which have crushed 44.4 million tonnes of sugarcane to produce 4.76 million tonnes of sugar. These factories will have to crush another 40 million tonnes cane by the end of the crushing season.

Maharashtra sugar commissioner Bipin Sharma told Business Standard: "Sugar factories that procured cane in November 2014 will now have to pay the shortfall in FRP by January 31. Factories that procured cane in December 2014 will have to pay by February 15. Further, mills that have purchased cane by January 15 will have to make the payment by February 28."

Sanjeev Babar, managing director, Federation of Cooperative Sugar Factories in Maharashtra, said the Centre should intervene immediately to help the sector. "Cooperative sugar factories are not in a position to pay FRP unless and until the Centre steps in and give an assistance of Rs 700 a tonne and also provide soft loan to stay afloat.”

Swabhimani Shetkari Sanghatana leader Raju Shetti, who is supporting the Bharatiya Janata Party-led government at the Centre and in Maharashtra, demanded that factories pay the FRP immediately to farmers.