Maharashtra: 11 mills fail to share revenue with farmers, likely to face action

As many as 11 sugar mills in Maharashtra might face action for failing to adhere to the revenue sharing formula (RSF) for the season of 2017-18. The final decision in the matter will be taken during the meeting of the cane control board on July 17 in Mumbai.

Sugar mills in Maharashtra are expected to share revenue generated from sales of sugar, molasses and ethanol generated from cane with their farmers. As per the recommendations of the C Rangarajan Committee, mills are expected to share revenue with 70 per cent of it going to the farmers while 30 per cent goes to the mill.

The cane control board, which is headed by the chief secretary of the state, gives the final nod to RSF. Mills that fail to adhere to the formula could be fined Rs 25,000 after the board recommends the same to the district courts.

For the 2017-18 season, 144 out of 175 mills had cleared their payment as per the RSF. Of the remaining 31 mills, 20 had finalised the RSF and agreed to pay the same while 11 mills failed to even respond to the queries. Senior officials of the cane commissionerate said the RSF for these mills have come abnormally high which can even put the financial health of the mills in question. The anomaly has risen due to the fact that these mills had not taken season or had crushed very little cane but had sold their old sugar stock. “Thus if the RSF is calculated, it is abnormally high for them,” said a senior officer of the sugar commissionerate.

Millers from Maharashtra, however, say their finances have been hit as sugar prices and sales have plateaued. Madhavrao Ghadge, chairman of the Sri Gurudutta Sugar Limited — a private mill in Kolhapur — said the core market of West Bengal and North East has been captured by mills in Uttar Pradesh.

“They get an advantage due to their geographical proximity and thus are able to quote lesser transport rates,” he said. Maharashtra’s mills, Ghadge said, are finding it difficult to match up to the competition. “We have asked for a Rs 500 per tonne subsidy from the government to help us reduce our stock,” he said.