Maharashtra sugarcane crushing: Meeting today to fix first advance

With the crushing season less than six weeks away, Maharashtra’s sugar millers, grappling with a widening gap between cost of production and realisation, are keenly awaiting a final decision on the amount they have to pay as the first advance to cane growers. The expected sum is Rs 1,370 per tonne, which is the state’s average fair price (FRP). A ministers’ committee meeting here tomorrow will fix the figure.

The meeting, to be held under the chairmanship of Chief Minister Prithviraj Chavan, is crucial as the state is expected to register production of 9.3 million tonnes during crushing season 2011-12 (beginning October 1) compared to 9.1 million tonnes last financial year. This was because of a five per cent increase in sugarcane availability. Millers this season will have to crush a record 82.5 million tonnes of sugarcane.

A state government official on Wednesday said that sugar mills would be strictly told not to pay above the FRP as the first advance. “This is to avoid possible financial problems,” he told Business Standard. Last year, millers announced a first advance of Rs 1,800 to Rs 2,000 per tonne as against the FRP of about Rs 1,450 per tonne. “This led to serious financial burden, because sugar prices subsequently fell and many millers were unable to pay this price,” he recalled.

The Federation of Cooperative Sugar Factories in Maharashtra, a representative body of 160 mills, has already asked members to adhere to the state’s FRP price of Rs 1,370 per tonne. Said a managing director of a sugar cooperative: “If millers pay in excess of the proposed Rs 1,370 per tonne, they will attract action from the state sugar commissioner.”

Another miller argued the statutory minimum price/fair & remunerative price should be uniform up to a certain level and millers may be allowed to share it equally with cane growers. Besides, the higher sugar recovery may be considered as a base for determining sugarcane prices for new varieties for their widespread adoption.

Yet another miller suggested the FRP be scientifically fixed on the basis of clause 3(c) of the Sugarcane Control Order, 1966. “As the all-India average sugar recovery is above 10 per cent and only less than 10 per cent of the sugar factories have recoveries below nine per cent, FRP should be linked to 10 per cent recovery,” he said. “This will motivate sugarcane farmers to go for varieties with higher yield and recovery.”