Maharashtra co-op sugar mills in flux

By: |
Pune | Published: November 28, 2014 12:31:32 AM

State government move to reduce distance between factories worries millers

The recent announcement by Maharashtra cooperation minister Chandrakant Patil to consider reducing the 25-km distance between sugar mills has sent alarm bells ringing among cooperative mills. Millers fear the move could lead to a scramble for cane and unfair competition between cooperative and private factories.

According to the minister, the proposed relaxation in distance between two sugar factories will increase competition and promote entry of the private sector in the sugar industry, thus enabling sugar factories to become professional to pay the fair and remunerative price (FRP), which is mandatory, to sugarcane growers.

The Maharashtra State Co-Operative Sugar Factories Federation has appealed to the government to hold consultations before taking a formal decision in this regard. “There has been no formal communication from the government on this issue yet. However, should this happen, there will be more competition for cane and more private mills will end up being established,” Sanjeev Babar, MD of the factories federation, said.

The previous Congress-NCP government had raised the mandatory minimum aerial distance from 15 km to 25 km to avoid poaching and to help secure sufficient cane area for individual factories.

According to Babar, the federation had approached the Rangarajan committee on this issue a couple of years ago, explaining the rationale behind retaining the distance between two mills. The sugar industry in Maharashtra has given 100% assurance to farmers for purchasing their produce on a long-term basis. Every designated mill is obligated to purchase from cane farmers within the cane reservation area, and conversely, farmers are bound to sell to the mill. “A formal notification is yet to come from the government and the federation will urge it to hold consultations before taking any final decision,” Babar said.

Balasaheb Patil of Sahayadri Sahakar Sakhar Karkhana says the decision can be taken by the Centre and not the state. However, should this happen, the cooperative movement in Maharashtra may die in 10-12 years, he said.

Maharashtra’s sugar sector has some 179 registered cooperative and 65 private factories. Nearly 200 proposals from the private sector to establish sugar units are reportedly pending with the state sugar commissionerate for clearance. The state contributes a third of India’s sugar output.

KV Deshmukh, an industry observer, said that since the government has stopped giving share capital for the formation of cooperative mills, there will be more private mills in the state and cooperative mills could suffer in the bargain. Yogesh Pande, founder president, Maharashtra State Sugar Brokers Association, says reducing the distance between two mills will force millers to concentrate  on better quality.

“Marketing and branding will be a new task for millers and farmers will have the option to sell cane since the current system binds the farmer to sell cane to mills in the designated area,” he said. “New sugar mills with modern technology will also come up,” he added.

Meanwhile, the government has decided to approach the Centre for a R2,100 crore relief package for millers.

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