Agri Business

Sugarcane FRP: Political parties reaching consensus on cane payment in instalments

Radheshyam Jadhav Pune | Updated on September 27, 2021

Maharashtra farmers want the settlement in one go; readying up for protests

While ruling and opposition political parties are inclined to make amendment in Sugarcane (Control) Order, 1966, to break the payment made to sugarcane farmers in instalments, farmer organisations in Maharashtra are gearing up for agitation against any such move.

The ruling Shiv Sena-Nationalist Congress Party-Congress government is in support of the Union government’s plan to pay Fair and Remunerative Price (FRP) in instalments. However, all farmer organisations in the State have opposed the move. Farmer organisations have threatened to launch agitations across the State, ahead of the crushing season starting next month.

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The Commission for Agriculture Cost and Prices (CACP) in its recent report on price policy for sugarcane ( 2021-22 sugar season) recommended cane payment in instalments. “The statutory provision of Sugarcane ( Control) Order, 1966, mandates payment to the farmers within 14 days from the date of supply of sugarcane but is rarely complied by the mills as sale of sugar is spread throughout the year. The mills take loan from the banks to make payments to farmers and incur a huge interest cost. The Commission recommends amending Sugarcane (Control) Order, 1966 to allow cane payment in instalments and payment of additional cane price to growers on account of interest cost saving by sugar mills,” the Commission stated in its report.

Earlier, the government think-tank NITI Aayog had recommended that mills should be allowed to stagger the payment for sugarcane — 60 per cent payment within 14 days of delivery of sugarcane to mills; another 20 per cent within next two weeks and the rest within another one month (or upon sale of sugar whichever is earlier) so that the entire dues are cleared within two months.

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Industry economy

One of the senior directors of a prominent sugar mill in the State told BusinessLine that there is no other option than to break FRP into instalments as mills are facing major problems.

Former MP and Swabhimani Shetkari Sanghatana leader Raju Shetti said that farmers will not agree to the instalment formula. “Mills must pay FRP in one instalment. Already many mills are not paying FRP on time and if it is divided in to instalments, farmers will not at all get their dues” he said. Farmer organisations in other States are also likely to oppose the move,” he added.

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The sugar industry in India has an annual turnover of about ₹1-lakh crore and generates revenue of ₹12,000 crore for the government exchequer. NITI Aayog noted that the sector has been facing serious issues related to profitability as well as liquidity in the last few years due to depressed sugar prices, inadequately covering cane prices, and mismatch between sugarcane prices and sugar prices.

In addition to FRP announced by the central government, some States fix State Advised Price (SAP) at higher levels, causing strain on the financial position of the mills.

Published on September 27, 2021

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