Maharashtra to seize sugar in transit to clear cane arrears

Faced with dozens of sugar mills in Maharashtra defaulting cane payment wilfully amid expectations of relaxation from the Centre, the state government is planning to confiscate sugar in the supply pipeline from the factory gate to warehouses. Sugar mills, especially in Kolhapur, Sangli, had offered to give sugar to farmers in lieu of cash.

However, later on, the mills said they would give sugar that they started producing then, and not from their existing stock. This had led to state officials considering harsh actions.

A number of co-operative and private sugar mills in Maharashtra have not paid sugar dues at all, despite having crushed tonnes of cane during the four-month period of the current crushing season (beginning October 2018).

This violates the Sugarcane (Control) Order, 1966, governing cane farmers and sugar mills. Under the law, sugar mills are required to pay 20 per cent of cane value at the time of procurement, while the remaining amount needs to be cleared within 14 days — failing which 15 per cent interest is applicable.

Industry sources estimate that seven mills across Maharashtra, including state cooperatives and private ones, have not paid a single penny while nearly 40 mills have paid less than 20 per cent of the Fair and Remunerative Price (FRP).

“Many mills in Maharashtra have issued public notices requesting farmers to register their demand with local agricultural circle offices in seven days effective February 6. We will wait for this period to get over. After that we will confiscate sugar in transit from the factory gate to warehouse, to be auctioned later at the price determined by the Centre, which is ~29 a kg,” said Shekhar Gaikwad, Sugar Commissioner, Maharashtra government.

Interestingly, farmers with mounting arrears have been demanding payment. But, mills often say they have mortgaged their entire stock to banks to raise working capital.

With cane arrears mounting to around ~5,000 crore in Maharashtra alone, farmers and mills are at loggerheads. Facing pressure from farmers, the Maharashtra government has directed district collectors to act harsh on defaulters.

“It is not all the time that entire inventory is mortgaged to banks. Assuming that all the existing stock is held with banks, we are targeting sugar in pipeline to take control of and realise to clear cane farmers’ payment,” said Gaikwad.

The state government is targeting mills in Kolhapur and Sangli districts, where arrears have been mounting.

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