Formulaic distress

New FRP calculations threaten to lower farm incomes

Credit : NULL

On Saturday, Maharashtra government launched a website and a mobile application which will use modern technology to analyse the drought situation in the state by collecting data on rainfall, crop situation and underground water. But the state is yet to come up with a mechanism to measure the distress in minds of farmers. This time, the reason is not just a looming drought situation, but delayed payment of their cash crop since last eight months.

Sugar cane control act explicitly mentions that after end of the concluding season factories should pay FRP amount to farmers within 14 days’ time period. However the amount of Rs. 220 crore of farmers in Maharashtra is still pending against their cane crop which was sold to factories 8 months back in the last season.  

“No action has been taken against the factories who failed to pay the farmers. After an agitation by farmers, the Sugar commissioner had issued notices to respective collectors to take action against Sugar factories. But some Sugar factories approached the cooperative minister of the state, who in turn, nullified the orders of taking due action on errant mills,’’ says Pooja More, a farmer from Beed district, adding, “Farmers in the state are already facing many problems. Especially in Marathwada, it is very hard to grow a water intensive crop like Sugarcane. And if you are not getting single rupees after eight months what will you do. How to pay back the loans of the banks and money taken on hefty interest rates from the local private money lenders? The mills should pay the remaining amounts along with the interest to the farmers.”

On Saturday, farmer representatives from the Satara and Beed district had gathered at Sugar Commissionerate here at Shivajinagar in Pune to press their demand of delayed payment of FRP. The document containing demands of farmers presented to the Sugar commissioner mentions, the New Phaltan Sugar factory  from Phaltan in Satara district has not paid the amount of Rs 47 crores 86 lakhs and 98 thousand to its seller farmers while Jay Mahesh NSL sugar factory in Beed has dues of Rs 38 crores 92 lakh and 44 thousand and Jai bhavani Sugar factory from Georai has delayed payments of 7 Crore 36 Lakh 69 thousand rupees of farmers in the region.

On 26 April this year, the sugar commissionerate had issued the Revenue and Recovery Certificates to respective factories who failed to disburse the payment of farmers. District collectors with the jurisdiction over these mills. should have taken the due action. But it was not executed.

‘The next season of the crushing is about to start, but farmers have not received the FRP for their previous produce. We don’t know what to do.’’ Says, Dhananjay Mahamulkar.  Dhananjay and other farmers in Phaltan, who had given their sugarcane crop to New Phaltan Sugars, are yet to receive their crop payments.

“This is an extremely bad situation for sugarcane farmers. It has been eight months since the factories purchased our sugarcane crop. But we have not received a single penny. This is yet another blow for the farmers in the drought prone regions of Maharashtra,” said Raju Gaike, a sugar grower farmer from Beed district.

He further adds saying, “Jai Mahesh Cooperative sugar factory in Majalgaon and Jai Bhavani Sugar factory in Gevrai have not paid a single rupees. Vaidyanath Sahakari Sakhar Karkhana has paid only Rs. 1,000 per tonne, and the outstanding amount is yet to be received.”

Every farmer must get the Fair and Remunerative Price for their sugarcane crop. The FRP of Rs2, 750 is mandatory assuming a 10 per cent rate of recovery (the rate of conversion of per metric tonne of sugarcane into sugar. In other words, If factories recover at least 10% of sugar from one tonne of sugarcane crushed, they will have to pay a minimum Rs 2, 750 per tonne to the farmer. For an additional recovery of each percentage point over 10 per cent, factories are mandated to pay an additional Rs 275 per tonne to the farmer, according to the cane price formula determined by the Centre.

At present, the FRP price is linked to a basic recovery rate (percentage of sugar extracted from the cane) of 10 percent, after which the rates go up by Rs 2.75 per quintal for every 0.1 percent increase in the recovery rate.

“The delay in the payment of receiving a FRP has been the major issue where factories don’t follow to the norms. But there are issues in the formula of determining sugar price where farmers are caught unaware. Last year basic recovery rate was 9.5 per cent but this year it is 10 percent. It seems a slight adjustment but the 0.5% rise in the basic recovery rate amount is subject to a huge loss to the farmers in the state,” says Swabhimani Shetkari Sanghatana MP Raju Shetti.

“Some people linked to factories procure the cane from a long distance at the lowest rate from the farmers who have urgent need of money. Then the same crop is sold to the factories and additional burden of the harvesting and transport cost is imposed on the rest of the farmers.” adds Shetti, who has a plan to put forth a PIL in the court to highlight this issue.

Harvesting and Transport cost include the labor cost for the cutting of the cane and transportation to the factory. Ideally the factories should only deduct the transport and harvesting cost of the cane within the limit of 20 Km radius of the sugar factory. Reportedly, factories have been found imposing additional burden of amount ranging from Rs. 500 to 1,200 per tonne as harvesting and transport cost and have made deductions from farmer’s payments.

Yogesh Pande, spokesperson of the Swabhimani Shetkari Sanghatna says, “There is no provision in the sugarcane price regulation act that the recovery rate of the cane crop should be decided from the previous year average. Yet all factories are doing it. They increased the basic recovery rate from 9.5 to 10 percent. How one can do that without taking farmers into the consideration?,” adding, “There had to be an amendment in the sugarcane price regulation act. Forget about the recovery cost for a while but why are you imposing hefty transport and harvesting charges on each farmer?”

Sugar factories give excuses of having unavailability of crop within 25 Km area but this is the prerequisite for any sugarfactory to have reserve area of crop. They are not supposed to bring sugar crop from longer distances. Shetti and his outfit have repeatedly alleged political vested interests and favoritism from the ruling dispensation and many in the industry have spoken about the arbitrary formulas that the administration comes up to finally end up benefiting the sugar mills.

Dhananjay has a concern to share, he says. “Some factories have given the FRP but not the additional Rs 200 which were promised earlier. Farmers are not even aware about these tricky calculations. They just want their pending dues. Who will teach them basic recovery rate and many technical things and what not?”