Maharashtra sugar mills continue to sell the sugar stock below the minimum selling price (MSP) of ₹3,100 per quintal. In December 2020, mills had brought huge stocks in the market to sell it below MSP as there was a delay in announcing export subsidy policy. Now, paucity of funds for clearing sugarcane payments to farmers has compelled mills to opt for the same strategy.

“This is happening simply because of the paucity of funds for clearing cane payments. The root cause of financial turmoil (in the sugar sector) lies in the government’s indecision on raising sugar MSP and keeping the same MSP irrespective of sugar grade,” said Prakash Naiknavare, MD of the National Federation of Cooperative Sugar factories Limited.

One of the senior directors of Sangli-based sugar mills requesting anonymity said that many mills in the State are not in the position to pay the final instalment of FRP to farmers. “The sugar season is about to end and there is immense pressure from farmers’ organisations to pay full and final FRP to farmers. The Sugar Commissioner has already issued Revenue Recovery Certificate (RRC) to 13 mills that have failed to pay the FRP,” he said.

Industry players say that many mills are depending on export to pay FRP, but the majority of the mills are opting for selling sugar quota below MSP.

Swabhimani Shetkari Sanghatana led by former MP Raju Shetti has demanded that the Sugar Commissioner must take stringent action against mills and directors if the final instalment of FRP is not paid on time.

Sugar mills’ demand

According to the Indian Sugar Mills Association (ISMA), sugarcane farmers in India are paid 100 per cent more than the A2+FL cost, whereas, in the case of other competing crops like paddy, pulses, oilseeds, jowar, cotton, maize, groundnut the mark up is in the range of only 50-65 per cent over the A2+FL cost. This except in the case of wheat, barley and gram, where the mark up is 75-100 per cent.

The industry has been demanding that the Centre must hike the MSP from ₹31 per kg to ₹ 34.50 to ensure that sugar mills are able to pay farmers on time.

Government’s Assistance

The Centre admits that due to excess production of sugar than demand during the last few sugar seasons and similar projection of excess production during the current sugar season, prices of sugar remain subdued which has adversely affected the liquidity of sugar mills.

Minister of State for Consumer Affairs Raosaheb Danve told Lok Sabha early this month that to improve the liquidity position of sugar mills and to enable them to make timely payments to sugar cane farmers, the central government has taken various measures in the form of assistance schemes to sugar malls during the last three sugar seasons and the current sugar season 2020-21.

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