Cooperative Sugar Mills in Maharashtra Seek Hike in MSP

Maharashtra Cooperative sugar mills are seeking a grade-wise rise in the minimum support price (MSP) of sugar and a government guarantee for mills that have reported a negative NDR (net disposable resource). 

Accordingly, these sugar mills have been fended off by banks for working capital loans for the new season, top officials of the Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) said. 

According to a report by Financial Times, Jaiprakash Dandegaonkar, chairman of the federation said that the mills are pursuing a rise in MSP to counter the distinction of mills from Uttar Pradesh that have apprehended the entire market.  

The current MSP for sugar is Rs 3,100 per quintal for all grades. However, the federation is seeking Rs 3,450 per quintal for S Grade, Rs 3,600 per quintal for M Grade and Rs 3,750 per quintal for L Grade. 

Maharashtra mainly produces S Grade and Uttar Pradesh produces M Grade. The mills in UP have got an advantage because their sugar is sold much quicker as there is no difference in the MSP. Currently, mills from UP are also dominating the market because of their location advantage as well. 

UP mills sell their product to Gujarat, Rajasthan and north-eastern states that were traditionally monopolized by Maharashtra. Whereas during the nationwide lockdown, mills in the state managed to sell only about 50 let cent of the quotas allotted to them for the month. 

The next season is expected to see a bumper cane production, with 900-950 lakh tonnes of cane estimated to be available for crushing and hence more than 300 lakh tonnes of cane is likely to remain idle if this issue is not resolved. 

Last week, as many as 37 cooperative sugar mills in Maharashtra were not able to raise capital from banks to start their operations. The Maharashtra State Cooperative Sugar Factories Federation has urged NABARD to allow mills to raise finance from the banks by restructuring their existing loans. 

Furthermore, 13 mills which bank with the District Central Cooperative Banks (DCCBs) have negative NDR and thus will not be able to raise fresh capital for the next crushing season.