All eyes on sugar commissioner as he gets ready to decide on interest on cane dues

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Ingole’s insistence is drawn from a rarely used provision of the Sugarcane Control Act of 1966, which talks about payment of interest to farmers in case the FRP is not paid within 14 days of purchase of cane. The interest as per the Act would be calculated at the rate of 15 per cent per annum and the farmer would get the payment with interest. Meant as a safety measure to ensure payment to cane growers, this provision has rarely been used in Maharashtra as mills have till a few years back not defaulted in payment.

However, due to the glut in the international sugar market and falling sugar prices, the mills in the state are now failing to pay the farmers the FRP. With the mills running into cane arrears to the tune of Rs 3,500 crores, the cane farmers, Ingole said, is being deprived of their payment. The sugar commissioner had, in fact, ordered auction of sugar stock of six mills to recover the cost.

Back in January last year, Ingole had moved the Aurangabad Bench of the High Court to ask for payment of FRP and interest on it for the farmers. The High Court, in its order of August 2015, has asked the sugar commissioner to solve the matter within 12 weeks, which ends on November 30. Ingole said that the commissioner has held two hearings on the matter till date.

Sources in the sugar commissionerate as well as officials associated with various sugar mills across the state say that the interest on the cane arrears would come to around Rs 300 crores. “During the initial discussion, we had urged the farmers not to press for payment of interest and had concentrated on payment of FRP. This was taken in view of the problems the global sugar markets was reeling under and the bad financial health of the mills,” said a senior officer of the sugar commissionerate. This year, around 22 sugar mills, both cooperative and private, have gone into negative net worth. The High Court’s decision has now put the onus on Sugar Commissioner, who has called for a hearing on the matter on November 17.

Ingole said that mills have been sitting on their sugar stock and have been depriving the farmers of their dues. “The price of sugar has been on the rise and given the adverse prediction of production for the next seasons prices are bound to rise higher. The mills are holding on their stock for greater gains,” he said.