Sugar mills owe farmers Rs 5,759 crore, dues could become a poll issue in 20 seats

Times of India – 13 March 2019, MUMBAI: Sugar factories in Maharashtra owe cane farmers Rs 5,759 crore with the crushing season set to close by the end of this month. With farmer leader Raju Shetti on the offensive, delayed cane payments could become an issue in the elections, especially in the sugar bowl of western Maharashtra.

Overproduction of sugar, both within India and in key sugar-producing countries like Brazil, has resulted in unsold stocks. This has made it difficult for sugar factories to pay the dues of cane farmers at the rate of the fair and remunerative price (FRP) set by the Centre. Earlier this month, the Centre approved a soft loan of over Rs 10,000 crore to help mills pay cane arrears. It also raised the minimum sale price of sugar by mills from Rs 29 to Rs 31.

Shetti, who was part of the NDA in 2014, quit three years later. He is now in talks with the Congress-NCP alliance for a possible tie-up in the Lok Sabha polls. “We have given them a deadline of March 13. Even without an alliance, we will contest 15 seats. Our fight is against the Centre which has not handled the sugar surplus issue on time,” said Shetti, who leads the Swabhimani Paskha. In January, cane farmers had set fire to two sugar factories in Kolhapur over unpaid dues.

While Shetti’s following is limited to a few constituencies, mainly in western Maharashtra, sugar factories in the state span Marathwada, Vidarbha and north Maharashtra as well. The leading sugar barons come from the Congress, NCP and BJP. “Sugarcane is grown in at least 20 of the 48 constituencies in the state. And cane farmers across the state face the issue of unpaid dues,” says Shetti.

Officials say pending cane dues in the state are a fraction of the national arrears, now pegged at Rs 23,000 crore. “In several cases, farmers in the state have agreed to take a deferred payment from sugar mills and are waiting for part of the payment later in the year,” said state sugar commissioner Shekhar Gaikwad.

He said 73% of the state’s annual cane payments have been made and 27% are pending. “We have issued notices to 100 sugar factories and are optimistic that the payments will be settled soon,” said Gaikwad.

Besides the glut in the domestic market, sugar mills are also dealing with the 20-30% slump in demand from traders. “It seems traders procured surplus sugar when the minimum selling price was lower at Rs 29. And now that the price has risen, they are not buying. So the offtake pipeline is blocked in the short run,” said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories (NFCSF).

Surplus sugar stock continues to plague the industry. The state expects a production of at least 106 lakh tons this year. The all-India production is expected to reach 315 lakh tons, up from 284 lakh tons a few years ago, according to the NFCSF.