Cane payment fight erupts in Maharashtra

Growers threaten stir from Oct 30, including road blockades, while co-op sugar factories say state-set price is unaffordable

A face-off seems likely soon between farmers’ associations and the  cooperative sugar industry in Maharashtra over the payment for cane, the price for which is set by the government, at a level the factories say is invariably impractical.

Various organisations representing cane growers have pressed for payment at Rs 2,700-3,500 a tonne as a first advance. Co-op sugar factories say they cannot pay; their cost of production is too high and sugar prices have fallen, too. The farmer bodies have threatened a stir from October 30. The cane crushing season begins from November 1.

The state government has announced a ‘fair and remunerative price’ of Rs 2,100 a tonne for 9.5 per cent recovery, with an increase of Rs 221 a tonne for every additional one per cent recovery. Sugar factories have been told to pay the minimum of Rs 2,100 a tonne to  growers or face punitive action.

Raghunath Patil, president of the Shetkari Sanghatana, told Business Standard: ‘’The co-op sugar industry should pay the first advance of Rs 3,500 a tonne. If the cane grower is paying direct and indirect taxes (totalling to) Rs 3,560 a tonne, then the co-ops should not pay them just Rs 2,500 a tonne. We will start a rasta roko from October 30, followed by curbing the movement of trucks carrying cane and milk across the state.’’

Swabhiman Sanghatana, led by Raju Shetti, a non-party MP, has demanded cane payment at Rs 2,500-2,700 a tonne. The co-op sugar industry contends that sugar prices have fallen to Rs 2,600 a quintal, compared to Rs 3,400 a quintal last year. The spread-up margin will be another Rs 400 a qtl and against such a backdrop, it will be impossible to pay more. Of the 108 co-op sugar factories which participated during the 2012-13 season, 50 have a negative net worth. Which means they’re ineligible to get bank loans to participate in the coming season.

Sanjeev Babar, managing director, Federation of Cooperative Sugar Factories in Maharashtra, said it would be difficult to match the demands. He said sugar factories had made cane payment of Rs 1,800-2,600 a tonne during 2012-13; each should decide what it can pay, based on its financial position.

A state government official, who did not want to be named, shared Babar’s view and said it would be up to the individual unit to take a call on cane payment.

According to Babar, Maharashtra, which contributes about 30 per cent to the national sugar production, is expected to produce 7.2-7.4 million tonnes in the 2013-14 season, against eight mt in 2012-13. The state will have a carry-forward stock of at least three mt.

Yogesh Pande, founder-president of the Maharashtra Sugar Brokers’ Association, said sugar prices were expected to remain subdued due to excess production. Hence, the factories might not be in a position to fulfill the demand made by farmers bodies.