13 January 2021, New Delhi, IN: Even as farmers in Maharashtra and Uttar Pradesh are gearing up to agitate against mills demanding timely payment of Fair and Remunerative Price (FRP) and State Advised Price (SAP), sugar millers claimed that higher FRP and SAP leads to rising cane price payment arrears. However, farmers’ leaders refuse to accept the argument.
Sugarcane farmers in Maharashtra have demanded that sugar mills must pay FRP in one go.
According to the Indian Sugar Mill Association (ISMA), one of the main reasons for cane price payment arrears is high FRP set by the Centre. Millers said that they are facing a tough financial situation, as there is no correlation between the revenue generated by mills and the cost incurred in the production of sugar.
The FRP is based on the cost of production of sugarcane and an element of assured profit as to cover the risk of sugarcane farmers. According to ISMA, the mark up above the cost of production of sugarcane, at an all-India average basis, is as high as 100 per cent over the cost of producing sugarcane.
Millers claimed the Minimum Selling Price (MSP) has been revised only once back in February, 2019 to ₹31/kg. The government has increased the FRP for sugarcane from October, 2020 but not the MSP. The Centre increased the FRP by ₹10 to ₹285 per quintal for a basic recovery of 10 per cent for the current season.
NITI Aayog, along with various States, have requested for a hike in the MSP to ₹33-36 per kilo, to facilitate timely payment to farmers.
Some States including Uttar Pradesh declare SAP for sugarcane considering the cost of production and productivity levels. The SAP is generally higher than the FRP.
Millers said that dual pricing is distorting sugar economy and leading to cane price arrears. High SAPs without any linkage with the output price is viable, said industry players, adding that the system of SAP must be removed and if States announce SAPs they must shoulder the price differential.
“Sugar mills insist on low FRP and abolition of SAP citing low sugar prices and low demand but markets are not stagnant. No sugar mill has shared its profit with farmers when sugar prices are at the peak,” said former MP Raju Shetti who is also the President of Swabhimani Shetkari Sanghatana.
Shetti added that mills are painting the wrong picture of sugarcane farmers getting bumper benefits out of cultivation. He insisted that the production cost incurred by farmers is much more compared to the FRP and SAP. He added that mills dilly-dally to pay one-time FRP to farmers despite making money.