After Niti Aayog, the Commission of Agricultural Cost and Price (CACP) has suggested that sugar mills should be allowed to pay growers the fair and remunerative price (FRP) in instalments. In its latest report, the CACP has asked the Centre to suitably amend the Sugarcane (Control) Order 1966 to bring about this change.
The sugarcane control order mandates that mills have to pay their farmers the government declared FRP within 14 days of delivery of cane. Sugar commissioners can recover cane dues as revenue arrears by auctioning off their property. The surety of payment is the main reason cited by farmers in water stressed parts of the state to go for cane.
In its Price Policy for Sugarcane Report for 2021-22, CACP, recommended part payment of FRP being made part of the order. “The statutory provision of Sugarcane (Control) Order, 1966, mandates payment to farmers within 14 days from the date of supply of sugarcane but is rarely compiled by the mills as sale of sugar is spread throughout the year. The mills take loan from the banks to make payment to farmers and incur a huge interest cost. The commission recommends Sugarcane (Control) Order, 1966, to allow cane payment in instalments and payment of additional cane price to growers on account of interest cost saving by sugar mills,” the report read.
Before the CACP, the Niti Aayog has also recommended the payment of FRP in instalments, which was met with stiff resistance from farmers’ bodies. Niti Aayog in its March 2020 report had recommended payment of FRP in three instalments, viz 60 per cent within 14 days of cane delivery 20 per cent within next two weeks and the rest within another one month or upon sale of sugar whichever is earlier. This, the Aayog said, was necessary to help mills to remain financially healthy and viable.
Cane dues have been a major problem, especially in Uttar Pradesh where mills have defaulted much more than those in other states. Mills say the burden of payment of FRP at one go forces them to take loans from various sources which weakens their balance sheets in the long run.
In Maharashtra, 97 of 190 mills that had taken season had entered in pre-harvest agreements with their farmer for part payment of FRP with the clause being inserted in the cane purchase agreement signed by farmers. Leaders like former MP Raju Shetti had stoutly opposed this agreement stating this was against the spirit of the law.
Recommendations of the CACP have met with stiff opposition from cane farmers who say this was not feasible. Ankush Chormule, an agronomist and cane grower from the village of Astha in Walva taluka of Sangli district, said the argument of part payment would not hold ground when farmers go to buy inputs or pay their labourers.
“When we go to buy fertilisers, pesticides etc., we have to pay upfront. Cane as a crop stands on field for minimum 14-18 months, and our economics depends on the payment we receive at one goes. If the mills are allowed to pay in instalments it would disturb our cycle,” he said.