3 million tonne drop in sugar production, farmers’ pay hit

Yearly hikes in fair and remunerative price for sugarcane, rising transportation costs and low sugar content in canes have resulted in a financial crisis for sugar factories

Mumbai: The sugar industry in Maharashtra is in the throes of a crisis as annual production has dropped by around 3 million tonnes this year compared to last year and sugar factories are finding it increasingly difficult to pay fair and remunerative prices (FRP) to cane farmers, Sanjay Khatal, managing director of Maharashtra State Co-Operative Sugar Factories Federation Ltd told Hindustan Times.

Farmers load harvested sugarcane onto a tractor in Karad (Hindustan Times)

“Compared to the 11 million tonnes of sugar produced last year, Maharashtra is going to end up with 8 million tonnes of sugar this year as only 30 factories are still running while another 170 factories have finished crushing,” said Khatal. Yearly hikes in FRP, rising transportation costs and low sugar content in canes due to climate change have resulted in a financial crisis for sugar factories, so the federation has urged the government for relief in loan repayment for three years and restructuring of some loans, said Khatal.

In a letter to deputy chief minister and finance minister Ajit Pawar and co-operation minister Babasaheb Patil dated March 12, the federation pointed out that while the FRP for sugarcane was set at ₹3,400 per tonne considering a basic sugar recovery rate of 10.25%, the rate had dipped by 0.7% this year owing to climate change. Further, while the FRP had been rising every year, the minimum support price (MSP) at which factories sell sugar was ₹31 per kg since 2019, said the letter signed by PR Patil, chairman, Maharashtra State Co-Operative Sugar Factories Federation Ltd.

Around 132 sugar factories are not able to pay farmers as per the FRP, the letter said, urging the state government to declare a soft loan scheme using which sugar factories could pay farmers their dues.

“We request you to restructure the loan for 10 years and also raise the issue with the central government to increase the MSP for sugar to ₹40.51 per kg,” said the letter.

Harshwardhan Patil, chairman, National Federation of Cooperative Sugar Factories (NFCSF), also expressed concern over the financial crisis faced by sugar factories in Maharashtra.

While sugar factories can survive financially if they run for at least 140-150 days in a year, the average season in Maharashtra this year lasted around 83 days. “It is very difficult to manage expenditure for 365 days with a season spanning just 83 days. The entire sugar industry in Maharashtra is under financial crisis this year owing to this,” said Patil.