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Maharashtra’s ailing sugar sector has made a strong pitch for financial assistance from the state government, as well as the Centre, to stay afloat during the ongoing crushing season. The move comes amid a steep fall in sugar prices, currently at Rs 2,540 a quintal (ex-mill) against the cost of production of Rs 3,400 a quintal. Exports are less lucrative for the sector as the commodity currently trades at $670 a tonne in the global market.
State cooperation minister Chandrakant Patil, who met industry representatives on Thursday, told Business Standard, “Most of the sugar factories in the state are unable to pay the fair and remunerative price (FRP). The FRP for 9.5 per cent recovery is Rs 2,200 a tonne and there will be a rise of Rs 232 a tonne for every one per cent rise in recovery. For 11 per cent recovery, FRP comes to Rs 2,650 a tonne. The state government has already waived three per cent purchase tax, which will provide a relief of Rs 65-70 a tonne for an individual unit. The state government will soon meet Prime Minister Narendra Modi and agriculture minister Radha Mohan Singh with a plea for financial aid including excise duty exemption announced last year. This will give further relief of Rs 2,200 crore to the state’s sugar sector.” As on date, 119 sugar factories — both cooperative and private — are operational, which have crushed 5.79 million tonnes of sugarcane to produce 5.09 million tonnes of sugar.
According to the founder of a leading sugar cooperative factory, who did not wish to be named, some of the sugar units have resorted to distress sale to avoid criminal proceedings in the wake of their failure to pay FRP to sugarcane growers. He suggested the state government allow export of molasses to help the ailing sugar sector. According to him, it is necessary as molasses prices have sharply fallen to Rs 3,000 a tonne from Rs 6,500-7,000 a tonne.
