Maharashtra govt threatens to seal godowns of sugar factories for non-payment of FRP

Asks factories to pay FRP to cane growers in seven days

The Maharashtra government said it would punish sugar factories not paying the fair and remunerative price (FRP) to cane growers.

The state government has also threatened to seal godowns of sugar factories within seven days and auction the commodity to realise FRP to pay cane growers. Two hundred factories have been asked to explain their case before the sugar commissioner.

The government’s action comes after a section of sugarcane growers in Pune launched a violent agitation on Monday. They had gone on the rampage at the state sugar commissionerate. The crushing season started on November 1. This season, 174 factories (98 cooperative and 76 private mills) have crushed 39.7 million tonnes of cane to produce four million tonnes of sugar.

State Cooperation Minister Chandrakant Patil told Business Standard: “'The government is not in a position to bail out the sugar factories for FRP payment considering the state of finances. The government has already decided to waive sugarcane purchase tax amounting to Rs 875 crore though a notification that will be issued soon. Besides, the state government has twice appealed to the Centre for a soft loan of Rs 2,100 crore to the sugar industry. However, the Centre has not taken a decision yet.”

Further, the state has held talks with the Maharashtra State Cooperative Bank for providing a short-term loan to fill the gap between the first installment and the actual FRP. The government has also shown its desire to bear an interest of Rs 120 crore for the current season.
 

Patil, however, reiterated that it will be binding on the sugar factories to pay FRP. For Maharashtra, the FRP for 9.5% recovery is Rs 2,200 per tonne. There will be an increase of Rs 232 per tonne for every 1% rise in the recovery. For 11% recovery, the FRP comes to Rs 2,650 per tonne. 

The Federation of Cooperative Sugar Factories in Maharashtra, however, said cooperative mills are not in a position to pay FRP especially when the cost of production is Rs 3,300 per quintal against the ex mill price of Rs 2,450 per quintal.

A Federation official said the Centre needs to step in and provide an assistance of Rs 700 per tonne to bridge the gap between the sugar price and the cost of production. He reiterated that the government should issue a notification to waive the sugarcane purchase tax soon.

Meanwhile, the Shetkari Sanghatana led by Raju Shetty, who is MP from Hatkalangade in sugarcane rich Kolhapur district and an ally of the BJP in Maharashtra, has alleged that the state government was going soft on sugar factories and demanded that immediate action be taken against the defaulting mills.