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117 sugar factories in Maha receive show cause notice for non payment of FRP

Sugar industry seeks help from the Centre & State governments for survival

Sanjay Jog  |  Mumbai 

The Bharatiya Janata Party (BJP)-Shiv Sena government in Maharashtra has decided to act tough against the sugar sector, which is still dominated by the opposition and the Nationalist Party.

The Commissioner of Sugar has served a showcause notice to 117 factories including, cooperatives and private mills, for non payment of fair and remunerative price (FRP) to cane growers despite the commencement of current crushing season from November 1. So far, 168 factories including 97 cooperatives and 71 private mills are engaged in sugarcane crushing during the current season. According to the stipulated norms, it is mandatory for sugar factors to pay FRP to cane growers within 15 days after crushing starts.

In Maharashtra, 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 factories 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.

State sugar industry players told Business Standard: "A large number of factories have expressed their inability to pay FRP due to widening gap between the cost of production and the ex-mill sugar price. The industry has sought the intervention of Central and state governments to find a way out."

Maharashtra cooperation minister has warned the board of directors of the defaulting factories might face arrest if they further default on payment of FRP.

Sanjeev Babar, managing director, Federation of Cooperative Sugar Factories, said he has already made a detailed representation to chief minister on the issues faced by the sector and requested him to provide assistance from the state government and also led a delegation to the Centre.

"The chief minister has agreed to soon lead the state delegation to the Union finance minister," Babar informed.

Babar said there is a provision in the cane control order whereby the cooperative factory can pay the difference between the first instalment and the FRP later with 15 per cent interest.

First Published: Sat, December 27 2014. 00:30 IST