Three sugar mills have failed to pay growers the fair and remunerative price (FRP) in the ongoing season, which has led the sugar commissioner to start the process of calculating interest on late payment.
Two of the three defaulting mills are operated by the Lokmangal group headed by Minister of Cooperation Subhash Deshmukh, while the third group is headed by former cooperation minister and Congress leader Harshvardhan Patil.
A total of 179 sugar mills are in operation in the state, and uptil Wednesday, the state had reported crushing of 347 lakh tonnes (Lt) of cane and production of 35.1 Lt of sugar. As of December 15, the operational mills owed Rs 3,642.9 crore as FRP payment to the growers of which mills have paid Rs 2,697.9 crore, roughly 74 per cent of the dues. Of the Rs 1,127.45 crore in arrears, Rs 42.82 crore is owned by the three mills that have defaulted in their payments.
The Sugarcane Control Act of 1966 mandates mandatory payment of FRP within 14 days of cane delivery, failing which the mills have to pay a 15 per cent interest on the due amount.
Incidentally, this will be the first year when the sugar commissioner has started calculation of interest on late payment. Of the remaining mills, 80 have paid well over their fixed FRP while 11, mostly in Ahmednagar, have paid the FRP.
Admitting to the failure of his group’s mills to clear their payment on time, Deshmukh blamed the slide and low demand for sugar in the market. “The millers have asked for an appointment with the Chief Minister to discuss the matter early next week and hopefully, something will come out of it,” he said.
Since the start of the season, prices of sugar have seen repeated correction, which has set the alarm bells ringing in the sector. The Maharashtra State Cooperative (MSC) Bank, has devalued the commodity thrice, which has made it difficult for millers to meet their commitments to growers.
Sugar rates, which had started at Rs 35-36 per kg are now hovering at Rs 30.50 per kg and there are reports of some mills selling sugar at even lower rates. Millers have expressed concern about further slide in cost, which will make payment of FRP difficult.
Mills in Marathwada, including the cooperative mill owned by former chief minister Ashok Chavan, have issued statements talking about their inability to pay even the FRP to the growers.