Maha to follow Rangarajan panel formula for cane price

Written by fe Bureau | Pune | Updated: Jul 22 2014, 05:39am hrs
Farmer agitations for better cane prices may soon be a thing of the past in Maharashtra. This sugar season onwards, the government has decided to give cane payments to farmers in consonance with the recommendations of the newly formed Sugarcane Control Board in the state. The 15-member board, to be headed by the chief secretary and comprising secretaries from various ministries and representatives from both sugar mills and farmer organisations, will link cane prices to income of sugar factories, Harshavardhan Patil, Maharashtra minister for cooperation, said.

The minister, who expressed dissatisfaction with some of the decisions taken by the new government at the Centre, said a delegation led by CM Prithviraj Chavan will soon meet PM Narendra Modi in Delhi to resolve pending issues related to the industry. A meeting of the committee of ministers in the state will be held with the CM in Mumbai on July 30 to take stock of the 2014-15 crushing season, after which the CM will lead the delegation in Delhi, Patil said.

The minister said cane price in Maharashtra will be fixed on the 70:30 formula as suggested by the Rangarajan Committee. "According to this formula, a sugar unit without any by-products' business will have to pay cane price of 70% of its revenue realisation, while it will have to spend 30% on its functioning. On the other hand, a sugar factory with by-products business will have to pay cane price of 75% of its revenue realisation. The board will fix the cane price after taking into account this formula," Patil told reporters at a press meet in Pune on Monday.

At present, the Centre issues a fair and remunerative price (FRP), which is the minimum price factories have to pay cane growers. Under the new law, factories will be liable to pay the FRP as minimum price towards the first installment as soon as sugarcane is supplied during a season.

Maharashtra has around 202 registered cooperative sugar factories and over 65 private factories. The state contributes 35.3% of the national sugar output, followed by Uttar Pradesh (23.7%). Maharashtra tops in sugar production as well as recovery of sugar.

According to the minister, the threat of drought is likely to impact sugar production this year. "In the last one-and-a-half months, there has been no rain. According to primary estimates, sugar production is likely to be down by 25%. However, crushing is likely to go up 15% this year. Around 88 lakh tonne of sugar is expected to be produced after crushing 770 lakh mt this season," Patil said.

The Centre has fixed an FRP of R2,200 per tonne on a recovery rate of 9.5% and thereafter R232 per tonne on a further recovery of 1%, he added.

Factories in Maharashtra will begin crushing from October 1 this year because of paucity of water and absence of a pick-up for sugar prices in the market, Patil said.

According to the minister, although the new government has announced decisions for the sugar sector, these are yet to be implemented. Maharashtra is seeking soft loans for the industry since cane payments are an issue for several state factories, he said.

"The Centre has also issued a circular stating that Maharashtra will not be eligible for loans from the Sugar Development Fund. This is unfair since the fund has a corpus of some R700 crore, of which R250 crore comes from the state," he said.