Sugar mills: UP can’t pay farmers, Maharashtra mills can’t pay workers

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September 1, 2020 7:15 AM

As per the latest report of the Maharashtra Sugar Commissionerate, as on August 15, mills in the state have paid farmers Rs 13,870 crore in cane payments, which was 99.41% of the total amount computed according to the Centre’s Fair Remunerate Price.

Maharshtra sugar-industry workers are also seeking a new wage agreement, as the previous one expired in March last year. Maharashtra has over 200 sugar mills, with a 1.25 lakh workforce.

The hole in the sugar economy shows up. Sugar mills in the country owe nearly Rs 17,500 crore to cane farmers at last count, most of which defaults by Uttar Pradesh’s corporatised sugar sector. In Maharashtra’s cooperatives-run sugar industry, mills have paid over 99% of last season’s dues to farmers, who themselves are stakeholders in the mills, but have withheld salaries to workers for several months now.

As Maharashtra mills’ salary dues to workers have touched Rs 500 crore, worker bodies are threatening agitation. “Around 40-45 factories have not paid wages to workers for over 10-20 months. We had approached the previous state government run by BJP for a resolution, but that was to no avail. Now, we’re taking up the matter with the incumbent Maha Vikas Aghadi government. The new season is slated to start next month. If the issue is not resolved by then, workers will have no other option, but to resort to agitation”, said Maharashtra Rajya Kamgar Pratinidhi Mandal president Tatyasaheb Kale.

The Cabinet committee on economic affairs (CCEA) on August 19 approved a hike in the fair and remunerative price (FRP) of cane to Rs 285 per quintal for the 2020-21 marketing year starting October 1, from Rs 275 prevailed earlier, but stopped short of raising the minimum selling price (MSP) of sugar. The Niti Aayog had in April recommended a hike in the MSP to Rs 33 per kg from Rs 31, factoring in the cane FRP of Rs 275 per quintal; industry demand is for an MSP of Rs 36-38/kg.

Maharshtra sugar-industry workers are also seeking a new wage agreement, as the previous one expired in March last year. Maharashtra has over 200 sugar mills, with a 1.25 lakh workforce.

As per the latest report of the Maharashtra Sugar Commissionerate, as on August 15, mills in the state have paid farmers Rs 13,870 crore in cane payments, which was 99.41% of the total amount computed according to the Centre’s Fair Remunerate Price.

Sanjay Khatal, managing director, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), said even as the sugar industry in the state was operating at a cash loss, the millers made the FRP payments to farmers on time. But, he said, the cash crunch resulted in delays in payments to vendors, banks, transporters and factory workers.

According to Khatal, since the workers’ unions had written to the federation for the revision of the wage agreement, the federation wrote to the state labour department, recommending a list of the factory representatives who could become a part of the tripartite committee. A meeting which was to be held with Ajit Pawar, deputy chief minister, last week was cancelled.

According to Khatal, the sugar MSP of Rs 31/ kg means the mills are operating at a cash loss of Rs 350/quintal. If the FRP accounts for up to 75% of the market price, the operations could be viable. “If the FRP payments are 80-85% of the market price, how are the millers expected to manage payments other than to farmers,” he asked. Maharashtra is now seeking an MSP of Rs 38 per kg.

Abhinash Verma, director general, Indian Sugar Mills Association (ISMA) drew a contrast between the Maharashtra and UP models for the sugar sector. “Maharashtra has a cooperative model where farmers own the sugar mills, while UP has private mills that are more like corporations in their functioning. Maharashtra mills first make the payments to farmers while UP mills first make the bank payments and often fail to make the farmer payments on time”. The MSP, he said, should be hiked to Rs 36 per kg.

Since Maharashtra mills default on bank payments, the debts pile up.The mills therefore go into negative net worth and keep seeking bailout packages from the government.

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