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Some sugar factories in Maharashtra have started to sell off their stock even below the ex-mill price, fearing revenue recovery proceedings of the district administration to unfair payment to farmers.
Cooperative and private sugar factory owners in western-Maharashtra and the Marathwada region are making desperate calls to sugar traders and brokers, offering to sell their stock at Rs 2,200-2,300 per quintal. They plan pay fair and remunerative price to to the sugar cane farmers from the proceeds.
The ex-mill price is Rs 2,440-2,460 per quintal.
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Last week, the state sugar commissioner had initiated revenue recovery proceedings against three sugar factories from Marathwada. The district administration has been directed to seal their godowns and auction the sugar produced by them in the market to pay the FRP to the farmers.
Similar action is expected against 26 others.
Sugar industry players, however, fear that if factories sell of sugar below the ex-mill price the price it will hit their finances. As an alternative, some factory owners who did not want to be named, said the government could procure sugar required for public distribution directly from the factories.
Of the 176 sugar factories, currently involved in the sugar crushing in the state, only 26 had paid FRP of Rs 2,200 per tonne while the balance have paid the first instalment ranging between Rs 1,500 and Rs 2,150 per tonne.
In Maharashtra, FRP for 9.5 per cent recovery is Rs 2,200 a tonne. 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.
Sanjeev Babar, managing director, Federation of Cooperative Factories, Maharashtra, told Business Standard, “If factories sell sugar under pressure, it will lead to a further deterioration of their financial position. Therefore, the federation is of the view that both the Centre and the state government need to immediately intervene and provide financial support to the industry.”
The state sugar commissioner had asked nearly 148 sugar factories to pay the FRP to cane growers by February 28.
Sugar factories, who have procured cane in November, were asked to pay the shortfall by January 31, for factories cane procured in December will have to pay by February 15.
Factories which have purchased cane by January 15 will have to make the payment by February 28.
