After sugar cooperatives, private millers in Maharashtra have stated that they are not in a position to make fair and remunerative price (FRP) payments to farmers for the just concluded 2014-15 season.
Millers have decided to inform both the state government and the Centre that they cannot make payments and are ready to face any punishment, senior officials of the Western India Sugar Mills Association (WISMA) said.
Private millers say unless the Centre brings an amendment by August 15 that the gap between FRP and the revenue sharing price as recommended by the Rangarajan Committee, if it is less, shall be paid directly by the governments to farmers from a Sugar Stabilisation Fund, it will be difficult for private mills to begin crushing operations in the coming season.
Maharashtra has around 87 private factories while Karnataka has 57 private sugar mills. Both the states’ private millers recently met in Pune to discuss this issue.
The Commissioner of Agricultural Cost and Prices (CACP) Report states that to minimize discontent during the downward cycle of sugar prices, it is recommended that the prices of cane be determined by hybrid approach, by revenue sharing formula or FRP whichever is higher. That is to say that farmers be given FRP even if the prices determined by RSF go below FRP. For this purpose, a Sugar Stabilisation Fund be created.
“The revenue sharing model of 70:30 suggested by the Rangarajan Committee should have been adopted for the industry instead of government fixing the FRP. The CACP this year has talked about setting up of a special fund to bridge the gap between FRP and the cane price realised in the 70:30 formula and this should be done,” WISMA president Thombre told FE.
Since October 2014, sugar prices have gone down by Rs 700-800 per quintal. Prices have come down from R2,750 to Rs 1,900 per quintal while production costs have moved up, he pointed out
Mills do not have the cash liquidity this year to make payments since they have been affected by the global glut and low prices.
Senior officials of the association pointed out that although the government has made announcements regarding the R6,000 crore interest-free loan package, it is yet to be implemented at the ground level. Therefore the Centre should purchase 10% of the millers stock through the FCI. With barely three months left for the start of the new season, private millers have urged the governments to take decisions and issue guidelines before August 15 failing which they say several mills may not be in a position to start business.