The Maharashtra government has demanded that the Centre reduce the interest on delayed Fair and Remunerative Price (FRP) payments to farmers from 15 per cent to 7.5 per cent. The State has also demanded a rise in the Minimum Selling Price (MSP) of sugar from ₹3,100 per quintal to ₹3,600.   

State Co-operative Minister Atual Save made this demand to Union Co-operative Minister Amit Shah during the recent National Conference of State Co-operation Ministers.

FRP payment

As per the Sugarcane Control Order, FRP to the farmers should be paid within 14 days of the procurement of sugarcane. The order also has a provision that failure to comply with the 14-day deadline would result in the mills having to pay an interest of 15 per cent per annum.

Sugar mills have been complaining that due to fluctuating sugar market, the stock remains unsold and hence they are not in a position to pay FRP to farmers in the stipulated timeframe. Sugar mill associations have repeatedly demanded a reduction in the FRP interest. However, farmers’ organisations are against any such move.

MSP hike

Sugar millers have backed the State’s demand to hike the MSP. According to millers, higher FRP, low recovery, and slack demand paralyse the industry every sugar season. Once the MSP is hiked, the mills can get additional loans from banks as the price of sugar stock will go up.

The union government fixes MSP for the sale of sugar along with the imposition of monthly stockholding limits on sugar mills. MSP was introduced to prevent cash loss to sugar mills and monthly stockholding is being imposed to maintain the demand-supply balance in the domestic market.   

In Maharashtra, mills have often sold the sugar below MSP to clear sugarcane payments to farmers.  

Sugar politics

Many of the sugar barons from Congress and the Nationalist Congress Party (NCP) are now in the BJP camp. In the 2019 State Assembly polls many of these leaders contested as BJP candidates.

The sugar barons want the BJP leadership to concede their demand so that their mills don’t land in a financial crisis as the State is going for another excess sugarcane season.

Reduction of the interest on delayed FRP payments to farmers from 15 per cent to 7.5 per cent and rise the MSP of sugar from ₹3,100 per quintal to ₹3,600 will help the mills to manage finances in 2022-23 season, according to the sugar bodies in the State.