Maharashtra Cabinet proposes to link cane prices to income of sugar factories

Dec 05 2013, 11:45 IST
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70 per cent of the collective income of sugar and byproducts will be used for cane farmers. (PTI) 70 per cent of the collective income of sugar and byproducts will be used for cane farmers. (PTI)
Summary70 per cent of the collective income of sugar and byproducts will be used for cane farmers.

The Maharashtra Cabinet Wednesday approved a proposal to formulate a new law linking sugarcane prices to the income of sugar factories. As recommended by the Prime Minister-appointed C Rangarajan committee on the deregulation of the sugar sector, the state has decided that 70 per cent of the collective income of sugar and byproducts will be used for payments to cane farmers. In case where only sugar production is considered, 75 per cent of the income will be used for these payments.

At present, the Centre issues a Fair and Remunerative Price (FRP), which is the minimum price the factories have to pay cane growers. Last week, the state witnessed violent protests in several parts by farmers’ organisations, which demanded higher prices and intervention of the state government.

The Prithviraj Chavan-led government has, however, maintained it cannot compel the sugar factories to pay a stipulated prices and can only act in cases where the prices paid are below the FRP.

Wednesday’s Cabinet decision paves the way for the formation of a 14-member  Sugarcane Control Board, whose main function would to be decide sugarcane prices besides FRP on revenue-sharing basis taking into account the actual revenue realised from sugar generation and other byproducts like bagasse, molasses and press-mud.

The board, which will meet thrice during a crushing season, will be headed by the state’s chief secretary and comprise officials from the state’s cooperation, agriculture and finance departments. The government will nominate three representatives of cooperative sugar factories, two others from private sugar mills and five farmer representatives.

Under the proposed law, factories will be liable to pay the FRP as minimum price towards first installment as soon as sugarcane is supplied during a season.

The balance payment will be made subsequent to publication of the valuation of the mill’s half-yearly income.

All payments will be directly sent to bank accounts.

A source said the proposed law would work in the favour of the sugar mills as the prices would depend solely on their income. They need not match the prices paid by other factories, which has been the norm hitherto.

In Maharashtra, several senior politicians, including ministers, control sugar cooperatives and private mills. The Cabinet also withdrew a provision of rigorous imprisonment for a year for those who violate its norms. The new law also contains a  provision stating “no court can take cognisance of offences under proposed law except if there is a complaint raised in this regarded by an

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