Maharashtra Sugar Mills Seek Concessions To Pay FRP In 2 Installments Next Season
Maharashtra Sugar
Mills Seek Concessions To Pay FRP In 2 Installments Next Season
The
West Indian Sugar Mills Association (WISMA) has approached the state
government, seeking concessions in the payment of Fair and Remunerative Price
(FRP) in two instalments, instead of paying farmers in a lump sum amount in the
coming sugar season. With FRP still pending for the sugar season of 2017-18,
some of the factories have had their assets sealed to enable cane payments.
Around
51 sugar factories in Maharashtra still owe farmers to the tune of Rs 437 crore
and at least Revenue and Recovery Certificate (RRC) notices have been issued to
at least 22 factories. Under pressure, factories have made payments of Rs 391
crore and four sugar mills are yet to make payments. It is now binding on
factories to make a one-time single FRP payment even if the factories do not
have necessary funds and do not get the necessary prices from the market.
According
to BB Thombre, president, WISMA, sugar mills may once again face the financial
crisis because of the increase in FRP and an estimated record production of
sugar in the next season. If the factories are unable to export sugar in time,
it will be difficult for them to make cane payments to farmers, he said.
Thombre in the representation pointed out it is now mandatory for sugar mills
to make cane payments in 14 days from the start of the season and that it is
difficult to make a one-time FRP payment to farmers.
According
to experts, the Gujarat formula is ideal for making FRP payments. Farmers in
Gujarat command the highest cane price. In the first phase, advances are given
to farmers, the second is within three months from the start of the season and
the last is when farmers get the final payment after the end of the season.
According to him, the minimum support price of sugar should be increased to `35
per kg from Rs 29 per kg so that it is in consonance with the cost of
production.
In the
sugar season of 2018-19, the area under cane cultivation has increased to 11.62
lakh hectares, with 150 lakh tonne of cane expected to be crushed at a recovery
rate of 11.30% to produce 107 lakh tonne of sugar.
The
Centre has increased the FRP to Rs 275 per quintal on a recovery of 10% and the
average FRP is expected to be in the range of Rs 2,786 per tonne. After
deduction of the goods and services tax (GST), sugar prices are expected to
reduce to Rs 3,000 per tonne. In August, sugar prices had bottomed to Rs 2,500
per tonne, putting most factories under financial stress. Taking the
international and domestic market into account, it was unlikely that sugar
prices would shoot up, Thombre said.
According
to him, due to a difference of `400 per tonne in the cost of production and
sugar prices, FRP payments are still pending. The Cane Control Act should be
amended to enable FRP payments in three stages as per the Gujarat formula, he
said. The transport tax on molasses has been increased to `500 per tonne from
Rs 1 per tonne and this should be scrapped.
For the
first three months of the season beginning October, November and December,
mills in Maharashtra should be directed to produce only raw sugar, he said.
This would result in the production of some 30-40 lakh tonne of raws, he added.
With the present trade fracas between the US and China, the latter is looking
at importing raws, an opportunity that India should not miss, Thombre said.
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