Maharashtra cooperative sugar sector demands bailout package from Centre

Say cane payment to farmers at set price impossible without support price of Rs 700 a tonne, other help

The sugar cooperative industry in Maharashtra wants central government help without delay, in the ongoing cane crushing season.

They want a support price of Rs 700 a tonne to bridge the gap between the price of sugar and cost of production, an incentive for export of four million tonnes of raw sugar over two years and an increase in import duty to 40 per cent from the present level of 25 per cent. It also wants a waiver in excise loan payments, restructuring of term loans and creation of a buffer stock of 7.5 million tonnes.

The Federation of Cooperative Sugar Factories in Maharashtra, representing about 170 units, sent the communication to the prime minister's office this week. It wants Chief Minister Devendra Fadnavis to lead a delegation to the Prime minister in this regard.

As on date, 20.2 mt of cane has been crushed, for 2.03 mt of sugar. The state government has estimated a sugar production of 8.8 mt, as compared to 7.6 mt last year.

The Federation’s managing director, Sanjeev Babar, told Business Standard: “Cooperative factories have expressed their inability to pay the (central government-recommended) Fair and Remunerative Price (FRP) of Rs 2,200 a tonne (for cane) for 9.5 per cent recovery. There will be a rise of Rs 232 a tonne for every one per cent rise in recovery. For 11 per cent recovery, the FRP comes to Rs 2,650 a tonne. The ex-mill sugar price is Rs 2,425-2,450 a quintal for the S-30 grade and Rs 2,525-2,550 a quintal for M-grade, while the cost of production is Rs 3,200-3,400 a quintal.”

Despite financial constraints, cooperatives have made payment of the first installment for cane — not at the FRP — at between Rs 1,500 and Rs 2,150 a tonne, he said.

State cooperatives minister Chandrakant Patil has said board members of units which do not pay the FRP will face arrest. Such payment, said Babar, was not possible without government help. “There is a provision in the cane control order whereby a cooperative unit can pay the difference between the first installment and the FRP later, with 15 per cent interest,” he said. Further, the Federation has called upon the state government to immediately issue a notification on exemption in purchase tax. “Although the minister has declared that purchase tax worth Rs 875 crore has been waived, no notification has been issued yet,” the official said.