Cash-strapped sugar mills in Maharashtra, particularly those in the districts of Sangli and Kolhapur, have decided to pay their farmers part of their cane dues in kind: in sugar produced by them. A decision in this regard was taken before Sugar Commissioner Shekar Gaikwad in Pune on Monday.
Mills across the state have failed to pay farmers the mandated Fair and Remunerative Price (FRP) this season, and they owe over Rs 4,000 core in arrears. The unpaid dues had triggered multiple protests, including a sit-in agitation led by Swabhimani Shetkari Sanghtana MP Raju Shetti in Pune last week. Taking action against the mills, Gaikwad had confiscated the sugar stock of 39 mills.
NCP MLA Hassan Mushriff, whose family runs the Sar Senapati Santaji Ghorpade Sugar Factory Limited, a private sugar mill in Kolhapur’s Kagal taluka, said financial distress has forced them to take this decision. “At Rs 2,900-2,950 per quintal, ex-mill prices of sugar are almost static. At this rate, the maximum we can pay is Rs 2,300 per tonne of cane, whereas the average FRP in our region is around Rs 2,800 per tonne,” he said.
If miils fail to pay the entire amount to farmers, they will face action by the sugar commissioner. “The only way before us is to pay farmers the remaining amount in the form of sugar,” said Mushriff.
This will be the first time mills in Maharashtra adopt this method of payment after failing to raise enough finances to pay their growers the mandated FRP. Usually, the first installment of the FRP is paid within 14 days of the sale of cane, while two or three installments are paid once the crushing season ends.
Accordingly, mills in the region will issue public notices, asking farmers to apply with field offices of sugar mills to avail the scheme. “In case farmers do not apply within seven days of the notice, it will be understood that they have no problem with delayed payment,” he said.
At the beginning of the sugar season, mills pledge their sugar stock well in advance and receive working capital to pay FRP and fund their day-to-day expenses. Banks recover both the capital and the interest from the sugar sale effected at the mills during or after the season.
Asked how the mills were going to ensure that banks release sugar to farmers, Mushriff said the mills will pay the banks the amount which is necessary for the release of necessary stock, to be given to the farmers as their partial FRP payment. Both private and cooperative mills will get this cleared by their respective board of directors and the public notice will be issued by Thursday.
Other mills in the state, which are unable to pay their FRP, will follow the same plan, said Jaiprakash Dandegaokar, chairman of the Maharashtra State Cooperative Sugar Factories Association. “We hope this will get the issue of cane arrears cleared soon,” said Gaikwad.