FRP: Maharashtra federation tells sugar mills to enter into pacts with farmers

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December 22, 2020 4:00 AM

Maharashtra is expected to crush 873 lakh tonne of cane and produce 99 lakh tonne of sugar in the current season.

The move is not only expected to give mills a breathing space to raise funds, but also ensure that farmers get paid in time, members of the federation said.The move is not only expected to give mills a breathing space to raise funds, but also ensure that farmers get paid in time, members of the federation said.

The Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) has advised sugar mills to enter into agreements with farmers offering a four-month window from the receipt of cane for paying fair and remunerative price (FRP) dues, top officials of the federation said.

The move is not only expected to give mills a breathing space to raise funds, but also ensure that farmers get paid in time, members of the federation said. Barely two months into the season and sugar mills in the state already owe farmers Rs 1,979.56 crore in FRP payments, according to the latest arrears report of the State Sugar Commissionerate.

Sanjay Khatal, MD, MSCSFF, said the insistence by some farmer bodies for one-time payment of FRP can pose problems for mills. Sugar millers have cited pending sugar stock and delay in the export policy announcement among reasons for their inability to pay one-time FRP. “Liquidity is going to be an issue with mills, which are already facing sluggish sugar sales and financial problems. Sugar prices are also below MSP on subdued demand. The federation has advised mills to enter into agreements on FRP payments with farmers at the start of the season itself to avoid payment issues. It is, however, not known how many mills have entered into such agreements,” he said.

According to the arrears report till December 15, the total payable FRP was around Rs 4148.33 crore and sugar mills have made 52.28% of the payment. FRP arrears to farmers are now Rs 1,979.56 crore. The country’s opening stock balance at the start of the season was around 107 lakh tonne and Maharashtra’s share amounted to some 36 lakh tonne, which is adding to the problem.

Millers said the export subsidy announcement also came late, leaving little scope for exports of raw sugar. “The focus is now on whites. The mill-wise allocation is yet to come and once that happens, millers will enter into export contracts,” Khatal said. Some of the millers had earlier exported under the Open General Licence (OGL), but now prefer to wait for the subsidy, he said.

The state has already produced 30 lakh tonne of new sugar and exports will ease the liquidity situation, Khatal said. Last week, the central government approved a subsidy of Rs 3,500 crore to sugar mills for export of around six million tonne (MT) in the ongoing 2020-21 marketing season that started in October.

Maharashtra is expected to crush 873 lakh tonne of cane and produce 99 lakh tonne of sugar in the current season. Khatal said millers have already decided to divert around 5-10 lakh tonne of sugar towards ethanol production because of excess stocks. Millers have already filed bids for 65 crore litre ethanol from B Heavy Molasses, 25 crore litre from C Molasses and 14 crore litre from sugarcane juice, he said.

Prakash Naiknavare, MD, National Federation of Cooperative Sugar Factories, said with Brazilian sugar being expected to hit the market by April, India still has enough time to meet the demands of the international market.

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