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Wednesday, July 18, 2018

Ahead of meeting for FRP payment, sugar mills say ‘no’ to govt formula

The chief minister had last week decided that mill owners will pay cane growers in two installments

Written by Partha Sarathi Biswas | Mumbai | Updated: December 18, 2015 4:15:25 am
Cane arrears for the current season has touched Rs 2,000 crores with majority of the mills yet to start payment. (Express photo) Cane arrears for the current season has touched Rs 2,000 crores with majority of the mills yet to start payment. (Express photo)

On the eve of the meeting to fix payment schedule for the present crushing season, sugar mill owners Thursday expressed their reluctance to adhere to the government’s formula of the mill owners paying cane growers in two installments, as had been decided last week in Nagpur.

Jaiprakash Dandegaonkar, vice president of the Maharashtra State Cooperative Sugar Factories Federation, said that majority of the mills were unaware of the formula for payment of Fair and Remunerative Price (FRP) and would not be in any financial condition pay it also. The sugar commissioner has called for a meeting of all the managing directors of the mills to discuss the payment of FRP for the current season.

The cane arrears for the current season has touched Rs 2,000 crores with majority of the mills yet to start payment. Around 160 mills are in operation for the present season. While cane growers have asked for a single installment payment of FRP , mill owners have expressed their inability to do so. As mentioned above in a meeting chaired by the chief minister it was decided that the mills will pay the growers in the 80 20 formula ie 80 per cent of the FRP as the first installment and 20 per cent as a single installment. Dandegaonkar said the mills are yet to receive any communication about the formula and the present market scenario is not conducive for the same. “At most, the mills can pay 60-70 per cent of the FRP as the first installment,” he said.

He said that although the sugar rates have improved over the last week or so, there still remains a substantial gap between the cost of raw materials and cost of the final product, which is difficult to bridge. The government help, he said, were in form of soft loans, which has not ensured the gap is met. “The industry is down for the last three years and its financial health is anything but good,” he said. Mills have run into losses which range for Rs 10-40 crores.

”In cooperative mills, the general bodies have declared that the payment should be made in three installments. It has been the norm in the state to pay FRP in two or three installments and we fail to understand the need for this year’s deviation,” he said.

Mills in the sugarcane belt of Pune, Kolhapur, Satara-Sangli and Solapur region have been issuing first installment in the range of Rs 1,700 -1,750 per tonne which the growers led by Swabhimani Paksha MP Raju Shetti has been protesting. Shetti’s organisation had stopped crushing in five mills in the region over the past few days with Shetti hinting at more violent protests in case the mills fail to adhere to the formula.

On the other hand, the issue of clearing cane dues for the crushing season of 2014-15 is also coming up for hearing on Friday. Mills which had failed to clear their cane dues last season were given a month to do so. Around 64 mills have failed to do so and the sugar commissioner had held hearing for 28 of them on Monday. The rest of the mills would be heard on Friday. It is expected that the commissioner would be issuing orders to suspend the crushing license of the defaulters. Dandegaonkar said that the cancellation of crushing license would result in the mills stopping operation.

”The government should make arrangement for the standing cane before taking such decision. We have been paying FRP and had it not been the precarious situation of the sugar market would not have defaulted,” he said. A group of mill owners most of whom are heavy weight political leaders had met the chief minister recently to protest against such action.

Minister of cooperative Chandrakant Patil however said that the government was firm in its decision to suspend the license of the erring mills.

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