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This sugar season, 190 sugar mills in Maharashtra participated in the crushing season compared to 144 sugar mills in the 2019-20 season. However, sugar industry players are not sure if many mills will be able to operate next season owing to crumbling finances.
Maharashtra sugar mills finally ended the current crushing season with the Sugar Commissioner of Maharashtra announcing the final data on sugarcane crushing this season on Friday. Mills in the State produced 106.3 lakh tonne of sugar after crushing 1,012 lakh tonne of cane with a sugar recovery of 10.50 per cent according to the data published by the Sugar Commissioner office. The State mills had produced 67 lakh tonne in the last season and a record 107 lakh tonne in 2018-19 season. Sugar mills now face a major challenge to sell their stock in the market as ex-mill sugar prices have been in the range of ₹31 - 33 per kilo for the last several months.
According to the Indian Sugar Mill Association (ISMA) to maintain liquidity of funds, mills are under pressure to sell sugar at such low prices, not enough to be able to generate adequate funds to pay the full FRP to cane farmers.
FRP notices
As of May 15, sugar mills in Maharashtra have paid a net FRP of ₹21,429.35 crore that is 94 per cent of the total payable FRP. 24 sugar mills have to pay ₹1,458.73 crore FRP to farmers and the Sugar Commissioner has issued Revenue Recovery Certificate (RRC) notices to these mills. The Sugarcane (Control) Order, 1966 has mandated payment of the cane price within 14 days of supply by farmers. If mills fail to make payment in the stipulated time, they have to pay 15 per cent per annum interest on the dues payable.
Out of 190 sugar mills that participated in crushing this season, 103 mills have paid 100 per cent FRP.
Uncertain about next season
According to Sugar Commissioner Officials sugarcane was cultivated on 11.42 lakh hectares for the 2020-21 season, compared to 8.22 lakh hectares in 2019-20. However, the planting area for the 2021-22 season is yet to be assessed.
“The State and the Centre will have to help sugar mills. The Central government must increase the minimum selling price to help mills improve revenue realization. Many mills are not in a position to pay FRP to farmers and if sugar stock remains in godowns, many mills will not be able to start crushing next season” said one of the directors of Sangli based sugar mill.
Union Minister Nitin Gadkari has been more vocal about problems faced by mills. Recently he warned that the sugar industry will crumble if it fails to balance sugar and ethanol production.
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