CACP team in Maharashtra to study sugar FRP issue

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Pune | Published: October 17, 2015 1:02:15 AM

Mills in Maharashtra have expressed their inability to make one-time payments to farmers and several mills this year have passed resolutions at their general body meetings for making FRP payments in three installments.

The Commission for Agricultural Costs and Prices (CACP) is learnt to have prepared a report recommending fixing of fair and remunerative price (FRP) for the 2016-17 sugar season. The move comes at a time when the mounting arrears of sugar companies are threatening to derail payments to farmers.

A three-member team, led by chairman Dr Ashok Vishandass, has been on a two-day study tour to Maharashtra to seek feedback on FRP and the challenges faced by both farmers and sugar mills with regard to FRP payments. The CACP is a statutory body that advises the government on the pricing policy for major farm produce.

Mills in Maharashtra have expressed their inability to make one-time payments to farmers and several mills this year have passed resolutions at their general body meetings for making FRP payments in three installments.

Presenting a detailed presentation to the CACP team, explaining the current position of the industry and issues at  Sugar Commisisonerate in Pune,  commissioner Vipin Sharma said mills across the country have been finding it difficult to make FRP payments to farmers this season because of falling sugar prices. Cane arrears in Maharashtra stand at Rs 1,200 crore as on September 30, 2015, Sharma added.

Officials revealed that the FRP recommendations by CACP  for the 2016-17 season are ready and the report for recommendations for the 2017-18 season is expected to be submitted by August 2016.

In the past six years, the FRP mandated by the Centre for sugarcane has been increased by 70% while the market price has fallen by 19%. Interestingly, during the presentation, the officials were told that no provision exists in the system to bring down the FRP.

Last season, the FRP had been pegged at Rs 2,200, which had resulted in huge arrears of about Rs 12,000 crore in sugarcane payments to farmers. A demand for moving away from the conventional system of fixing a FRP, based on estimates of sugar prices and opt for a revenue sharing model with 70% of sugar price going to farmers, has been growing in the industry.

Meanwhile, sugar industry representatives have said that even the CACP, which fixes the sugarcane price, had suggested the creation of a sugarcane stabilisation fund. The CACP has recommended fixing sugar price on basis of FRP to revenue sharing formula, whichever is higher and the establishment of sugar stabilisation fund so that farmers are paid their dues within  reasonable time.

The governments of sugarcane growing states, such as Uttar Pradesh, have announced ad-hoc State advised prices (SAPs) for cane, which have been way higher  than the FRP. The Indian Sugar Mills Association (Isma) had made a representation made a representation as sugar mills find it unviable to pay farmers the FRP for 2015-16 (October-September) sugar season.

Significantly, the Supreme Court recently sought the Centre’s response on a plea by sugarcane farmers association seeking the implementation of the Commission for Agriculture Cost and Prices (CACP) report for 2015-16 and a price stabilisation.

Isma has been demanding that the government must set up the fund and pay the difference between the FRP and the price of cane in accordance with the Rangarajan panel’s linkage formula.

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