With payment arrears to cane growers during the current crushing season that started last October at over Rs 4,800 crore already, cash-strapped sugar mills in Maharashtra have come up with a new formula to address the problem. They will, henceforth, pay about 20 per cent of dues in the form of sugar. This means that for every tonne of cane supplied, mills will give 17 kg of sugar as “payment”.
“The FRP (fair and remunerative price) of cane fixed by the Centre for mills in our region (Sangli and Kolhapur districts of south Maharashtra) is Rs 2,800 per tonne, whereas the maximum we can afford to pay at current sugar realisations is Rs 2,300. So, we are now planning to pay the balance Rs 500 as sugar from our mills. Since ex-mill prices of sugar are now at Rs 29-29.5 per kg, that will work out to roughly 17 kg for every tonne of cane,” said Hasan Mushrif, NCP MLA from Kolhapur’s Kagal assembly segment, whose family controls the Sar Senapati Santaji Ghorpade Sugar Factory Ltd.
Mushrif said that his mill, like many others, had no other option. The Sugar Commissioner of Maharashtra, Shekhar Gaikwad, had issued orders on January 29 for the attachment of properties of 39 mills across the state for non-payment of FRP to farmers.
This would be the first instance of Maharashtra’s mills taking recourse to such a scheme. “We will be issuing public notices, asking farmers to avail of this scheme. In the event of their not sending applications to field offices of the mills to claim payment in sugar, it will be understood that they will not have problems with not receiving the full FRP now. We will, of course, pay in cash as and when we have the liquidity to do so, by selling the sugar ourselves,” said Jayprakash Dandegaonkar, president, Maharashtra State Cooperative Sugar Factories’ Federation. He said the scheme will be first implemented in Sangli and Kolhapur before being extended to other mills in the state that are also struggling to pay farmers.
Mills in Maharashtra normally pay growers the FRP as the first installment within 14 days of taking delivery of cane. In most years, they also pay two more installments. One, after the end of crushing operations by around April. And then, close to Diwali before the start of the next season, depending on profits from sale of byproducts such as molasses/ alcohol and baggase/ co-generated power.
The ongoing 2018-19 season is the first in which many haven’t been able to pay even the FRP, which is a mandatory price. Of the 191 mills operational this season, only 11 have so far managed to pay the full FRP. The majority have paid 80 per cent of the FRP, while promising to discharge the balance 20 per cent after the end of the season. Now, they are offering to pay this 20 per cent, too — provided farmers are willing to take it is sugar.
Until January 31, Maharashtra mills had purchased cane worth Rs 13,306.56 crore at the average FRP of Rs 2,450 per tonne for the state. The total payment received by farmers, however, has been just Rs 8,464.47 crore, which translates into arrears of Rs 4,842.09 crore.
Farmers, however, are far from excited about the “sugar-for-cash” scheme. Bahubali Baburao Israna, from Kothali village in Kolhapur’s Shirol taluka, has already sold 120 tonnes of cane from five acres to three mills — two cooperatives, one private. “All of them have paid me only at the rate of Rs 2,300 per tonne, as against my FRP of Rs 2,800. If they will now pay me in sugar, where will I stock those two tonnes? My own family requirement is not more than 7 kg per month,” he said. Israna has another 80 tonnes or so of standing cane that will be harvested in a month.
Mahadev Pednekar, from Yamage village of Kagal, was dismissive of the idea. “I am entitled to receive sugar at a concessional rate from the Chhatrapati Shahu cooperative mill of which I am a grower-member. This sugar is more than enough for my family that includes two sons and their wives. I have supplied 200 tonnes of cane so far this season and received Rs 2,300/tonne. If they are going to pay me in sugar for the balance Rs 500/tonne, it will come to around 3.5 tonnes. Whom will I give this sugar to?” he asked.