Pact with individual farmer must for sugar millers to account for delay in FRP payments

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Published: September 20, 2019 1:57:08 AM

As per the Sugar Cane Control Act, it is mandatory for millers to make FRP payments within 14 days of the start of crushing, failing which the millers are expected to pay farmers an interest of 15% on the due amount.

individual farmer, sugar miller, FRP payment, economy news, Sugar Cane Control Act, Maharashtra news, Sugar, Sugar productionGaikwad pointed out that with such agreements, millers will get a grace period till the stipulated period mentioned in the agreements.

From this crushing season, sugar millers in Maharashtra will not be able to continue with a common agreement accounting for a possible delay in the Fair and Remunerative Price (FRP) payment to farmers. As per the new directives issued by state sugar commissioner Shekhar Gaikwad, millers instead, will have to sign agreements with individual farmers ahead of the start of the crushing season.

Normally, some of the mills during the annual general body meeting with the member farmers signed a common agreement stating that they may not be in a position to make the full single payment of the FRP to farmers. Such agreements helped mills escape any possible action by the commissionerate. This time, anticipating such a move by millers ahead of the season, the sugar commissioner has made it clear that such agreements will not be considered valid. Millers instead will have to sign agreements with individual farmers, he said.

Most mills have their general body meetings on September 30. During the past few seasons some of the factories even came up wiht agreements in the middle of the season to avoid action, according to industry people.

As per the Sugar Cane Control Act, it is mandatory for millers to make FRP payments within 14 days of the start of crushing, failing which the millers are expected to pay farmers an interest of 15% on the due amount.

Gaikwad pointed out that with such agreements, millers will get a grace period till the stipulated period mentioned in the agreements. Hereon sugar mills in Maharashtra are likely to get their crushing licenses for the new season subject to the condition that they agree to pay up Fair and Remunerative Price (FRP) dues of farmers within 14 days as per the Sugarcane Control Order, 1966.

Gaikwad said that the commissionerate has been following this practice for the last three seasons and some of the mills had approached the high court on this issue. However, the HC ruled in favour of the farmers, which is why around 99% of the factories had made 100 % FRP payments to farmers last season, he said.

Officials in the sugar commissionerate revealed that crushing licenses are issued to factories on the basis of the Maharashtra Sugar Factories Act, 1984. No factory can commence crushing without licence. However, the order has no provision with regard to FRP, officials said, adding that the sugar commissioner does have powers under the Sugarcane Control Act, 1966. The commissioner, therefore, used his powers to include the provision for payment of cane within 14 days for the benefit of farmers, officials said.

Sugar millers in Maharashtra still owe farmers around `589.59 crore under FRP payments for 2018-19 season, which is about 2 % of the total dues for the season. The commissionerate has extended the last date for obtaning crushing license to give factories more time to prepare for crushing.

The recent floods in Satara, Sangli and Kolhapur have affected the management of the factories negatively and they require more time to prepare for crushing, the commissioner said. Till now around 40 applications have been processed.

During the season of 2018-19, with a record sugar production of 107 lakh tonne, millers in the state found it difficult to make FRP payments to farmers, resulting in agitations by farmer bodies.

The low sugar prices this season had thrown the payment model between farmers and mills out of balance. There has been excess production of sugar for two years in a row. Maharashtra had produced 107 lakh tonne of sugar last season, the highest-ever recorded in the state.

Since the bumper production dented prices considerably, representatives of the sugar industry sought government measures to arrest the falling prices. The Centre stepped in and tried to fix the situation by setting the minimum selling price (MSP) of sugar at Rs 2,900 per quintal, later raising it to Rs 3,100 per quintal.

In the coming season, around 263 lakh tonne of cane is expected to be crushed across the country. In addition, there is a carry forward stock of 145 lakh tonne of sugar from the previous season. With the country’s total consumption at 260 lakh tonne, industry people expect prices to remain weak.

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