FRP for sugarcane farmers akin to minimum wages, not fair price: Madras High Court

In a recent ruling, the Madras High Court observed that the Fair and Remunerative Price (FRP) fixed by the Union government for sugarcane farmers was more akin to minimum wages and not fair price. 

The Court was hearing a public interest litigation (PIL) petition filed by agriculturist P Ayyakannu on behalf of sugarcane farmers from Thanjavur and Cuddalore districts in Tamil Nadu.

A bench of Acting Chief Justice T Raja and Justice D Bharatha Chakravarthy said it is only when State governments pay the higher State Advised Price (SAP) that small and marginal farmers could survive.

FRP is the price declared by the government, which mills are legally bound to pay to farmers for the cane procured from them. The payment of FRP across the country is governed by The Sugarcane Control order, 1966. And state governments usually fix an SAP which is higher than the FRP as it takes into consideration transportation costs and other local factors affecting the cane farmers.

The Court made the observations while hearing the PIL petition. As per the PIL, the farmers from the two districts had not been paid their dues worth over ₹157 crore for the years 2013 to 2017 by the company that they had provided sugarcane to. The respondent company, Aarooran Sugars Limited, however, opposed the PIL saying that the affected farmers themselves had taken part in proceedings before the National Company Law Tribunal (NCLT), Chennai, and had accepted to settle for 57 percent of the FRP owed to them.

The Court realized during the hearing that only 10 percent of the farmers whose dues were yet to be paid, had consented to accepting 57 percent of the FRP. 

The Court further said that it was unfortunate that the farmers had been forced to approach the court with “folded hands” for a sum that they were owed not as a Favour, but as dues for having provided sugarcane to a private company.

In the present case, the Court found that Aarooran Sugars had stopped crushing operations since 2018-19 and had undergone liquidation proceedings. Besides owing money to other creditors, the company owed ₹157.71 crore to 14,000 cane farmers as per the SAP, and ₹78.48 crore as per the FRP. Of this, the liquidator had approved the payment of only ₹45.02 crore to the farmers, and they had not even been paid that amount in full yet.

The High Court said the Tamil Nadu government had failed in its duty to protect the rights of these farmers. It said that when dues are not being paid on time right from the year 2013, after passing orders commanding the farmers to supply only to ThiruArooran Sugars Limited in exercising powers under Order 6 of the Sugarcane (Control) Order, the mandate and the procedure prescribed under Order 3 of the Sugarcane (Control) Order is not at all followed. Therefore, there has been clear failure on the part of the State authorities in realizing the price after issuing a statutory mandate to the farmers.

The Court said the farmers must be paid at least the FRP in full, if not the SAP, and directed the TN government to pay eligible farmers the balance amount that they were owed, within the next three months.