Sugar millers ask govt to allow spit payment of FRP

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Sugar millers ask govt to allow spit payment of FRP As India heads for yet another year of record sugarNSE 0.00 % production amid subdued global and domestic prices, millers from Karnataka and Maharashtra have asked the government to allow split the payment of fair and remunerative prices (FRP) instead of making it in one instalment, as stipulated by law. India is expected to produce 35.5 million tonnes of sugar in the 2018-19 sugar season starting October 1 as against an output of 32.25 million tonnes in the ongoing season, according to industry estimates. The Central government has started a monthly sugar release mechanism allocating a quota to each mill coupled with a minimum selling price of Rs 29/kg ex-mill. 

Though the measures have kept domestic prices firm at about Rs 30/kg at mill gates, it has also led to an accumulation of sugar stocks in the country. The Indian Sugar MillsNSE 2.59 % Association estimates that closing stocks could be 19 million tonnes at the end of the 2018-19 season if the country does not export sugar. 

The Karnataka wing of the South Indian Sugar Mills Association said in a letter to the government that sugar factories won’t be able to pay FRP in one go “due to both the release mechanism and delay in receipt of subsidy on exports.” 

“Split FRP payment will ensure that all farmers receive at least one round of payments,” said Anand Reddy, president of the Karnataka SISMA. The National Federation of Cooperative Sugar Factories (NFCSF) has also approached the Commission of Agriculture Costs and Prices (CACP) on this issue. 

“We want the CACP to adopt the Gujarat model, where cane price is paid in three instalments. It ensures that farmers get payments at the time of various festivals and the mills do not have to bear financial losses as they don’t need to take bank loans. This way, Gujarat farmers get the highest price for sugarcane in the country,” said Prakash Naiknavare, managing director of NFCSF. 

At a recent meeting in Pune, sugar millers from Maharashtra sought permission to make FRP payment in two or three instalments, as was the case before 2009. Under the Sugar Control Act (1966), the statutory minimum price was changed to FRP with the provision of stringent action for non-compliance. Although the FRP is applicable to sugar mills in Gujarat, too, the act is not implemented as stringently in that state as in Maharashtra, ndustry officials said. 

However, with the cabinet having already approved the FRP for 2018-19 and general elections coming up, the industry hopes the CACP will consider its demand for the 2019-20 season.

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By BOA Bureau