Maharashtra sugar factories continue to sell the stock of sugar below the minimum selling price (MSP) of 3,100 yen per quintal. By December 2020, factories had brought huge inventories to the market to sell below the MSP because there was a delay in announcing the export subsidy policy. Today, the lack of funds to offset payments for sugarcane to farmers has forced factories to adopt the same strategy.
“This is just happening because of the lack of funds to settle the payments for the cane. The root cause of the financial turmoil (in the sugar sector) lies in the government’s indecision over increasing the MSP of sugar and maintaining the same MSP regardless of the quality of the sugar ”, said Prakash Naiknavare, Managing Director of the National Federation of Sugar Cooperatives Limited.
One of the senior managers of the Sangli sugar factories requested anonymity, said many factories in the state are unable to pay the last installment of FRP to farmers. “The sugar season is about to end and there is tremendous pressure from farmers’ organizations to pay the FRP in full and definitively to farmers. The Sugar Commissioner has already issued a Revenue Collection Certificate (RRC) to 13 factories that have not paid the FRP, ”he said.
Industry players say many factories depend on export to pay for the FRP, but the majority of factories opt to sell sugar quotas below the MSP.
Swabhimani Shetkari Sanghatana led by former MP Raju Shetti demanded that the sugar commissioner take strict action against factories and managers if the last installment of FRP is not paid on time.
Demand for sweets
According to the Indian Sugar Mills Association (ISMA), sugar cane growers in India are paid 100 percent more than the A2 + FL cost, while in the case of other competing crops like paddy, pulses , oilseeds, jowar, cotton, corn, peanut, the profit margin is in the range of 50 to 65 percent only compared to the cost A2 + FL. This, except in the case of wheat, barley and gram, where the mark-up is 75 to 100 percent.
Industry asked the Center to increase the MSP from 31 per kg to 34.50 to ensure that the sugar factories are able to pay farmers on time.
The Center admits that due to excess sugar production relative to demand in recent sugar seasons and a similar projection of excess production in the current sugar season, sugar prices remain low, resulting in low sugar prices. which affected the liquidity of the sugar factories.
Minister of State for Consumer Affairs Raosaheb Danve told Lok Sabha earlier this month that to improve the liquidity situation of sugar factories and enable them to make timely payments to sugar cane producers, the government Central has taken various measures in the form of aid programs for sugar shopping centers during the last three sugar seasons and the current 2020-21 sugar season.