Maharashtra gives in principal approval to sugar mills facing liquidity crunch to pay farmers by giving sugar

PUNE: Maharashtra's sugar commissioner has given in-principle approval for making part of the cane payment in the form of sugar as sugarcane price arrears in the state have increased to Rs 4,576 crore. If implemented, this move could create a big decentralised stock holding with farmers, which can break the monopoly of traders in the sugar trade.

"Apart from subdued sugar prices, sugar mills have been complaining about lack of demand for sugar. Some sugar mills, which have been facing liquidity crunch, have agreed to pay farmers in kind," said Shekhar Gaikwad, commissioner (sugar), Maharashtra.

Of the 181 sugar mills that have been in operation in the state this year, only 10 have paid full amount of the fair and remunerative price (FRP) as mandated by the law, while 25 have paid more than 80% of the FRP amount. So far, sugar mills have paid only 39% of the FRP dues to the farmers. The state has crushed 497 lakh tonnes of sugarcane and produced 52 lakh tonnes of sugar till date with a sugar recovery of 10.63%.


The Swabhimani Shetkari Sangathana, a farmers' organisation based in south Maharashtra's sugarcane belt, has been firm on taking full payment of FRP as the first installment of cane price. It has also resorted to some violence to press its demand.

Raju Shetty, Member of Parliament and founder leader of the Sangathana, said, "Per acre sugarcane production of farmers has declined by 10 tonnes to 15 tonnes due to drought. As sugar mills haven't made cane payments or made only part payment of the FRP, farmers are not able to repay their crop loans. Defaulting on the loans makes them ineligible to get the interest rate subventions, leading to increase in burden of interest payment on them."

Shetty, who has demanded that sugar mills should give sugar to the farmers if they cannot pay him/her in cash, said, "As 80% of the farmers produce about 50 tonne to 60 tonnes of cane, each farmers will get about 8 kg to 19 kg sugar per tonne of cane delivered to the factory."

Shetty said that the mills should bear the charge of 5% GST, when paying farmers by giving them sugar. The minimum selling price (MSP) of sugar has been fixed at Rs 29/kg, while the industry has been trying to increase it to Rs 31/kg.