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Cane dues: Blame it on delay in export subsidy to millers

Sugar mills in Maharashtra are delaying fair and remunerative price (FRP) payment to cane farmers as the millers are awaiting export incentives of R45 per tonne.

By: | Pune | Published: September 15, 2016 6:13 AM
With the new crushing season slated to begin in a couple of months, the millers still owe farmers cane dues to the tune of R340 crore, senior government officials said. With the new crushing season slated to begin in a couple of months, the millers still owe farmers cane dues to the tune of R340 crore, senior government officials said.

Sugar mills in Maharashtra are delaying fair and remunerative price (FRP) payment to cane farmers as the millers are awaiting export incentives of R45 per tonne.

With the new crushing season slated to begin in a couple of months, the millers still owe farmers cane dues to the tune of R340 crore, senior government officials said.

According to Shivajirao Nagawade, chairman, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), the season could be difficult for mills since the area under production has reduced and the instalments of the previous season’s loans have come up for payment. “The mills are reeling under debt and have sent applications for the export subsidy. Most of the mills have not been able to make 100% FRP payments to farmers since they still have to get the subsidies from the government,” Nagawade said.

The production subsidy was initially calculated based on the estimated cane crushing of 255 million tonne in 2015-16. But the cane crushing has come down due to drought. Consequently, sugar output is also estimated to be lower at 25.2 million tonne this season. Initially, the export quota target was scaled at 15.70 kg of sugar for each tonne of ‘estimated cane crushing’.

With the cane acreage dropping down to 6.28 lakh hectares for the sugar season of 2016-17, mills are staring at a bleak season ahead. Last year, the area under cane cultivation stood at 9.54 lakh hectares. Nearly 3 lakh hectares has reduced this season which could lead to a drop in production to barely 50 lakh tonne and a scramble amongst mills for cane.

Significantly, the sugar mills have to repay loans of around R1,000 crore to banks. During 2013-14 and 2014-15, around 134 co-operative sugar factories received loans worth R3,273 crore. Instalments worth R1,000 crore are due this year. The government’s decisions including capping stocks of sugar, relaxing the mandatory sugar export rule and 20% export duty on sugar have led to a fall in sugar prices.

Vipin Sharma, state sugar commisisoner, said that some 44 hearings were held last week and sugar mills had assured of making payments. They are still awaiting the export subsidy payments from the government and therefore have not been able to make payments to farmers, he said.

Mills say that they are not in a position to make the payments for the first repayment of the soft loan of R3,200 crore that they had availed during the period 2013-14 and 2014-15. According to Nagawade, last couple of seasons have been bad for the millers. Around 69 factories have ended up with losses of R900 crore for the 2014-15 season and the total accumulated losses by the mills are around R2,900 crore, he said.

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