FRP fixed by Central government for sugarcane farmers is like minimum wage, not fair market price: Madras High Court

The Madras High Court recently said 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 [P Ayyakannu v The Government of Tamilnadu]..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 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."It is roughly estimated that the cost and expenses involved to an ordinary farmer, is more than 80% of the Fair and Remunerative Price which is fixed by the Central Government which is like the minimum wage and it is not the fair market price.Thereafter, the State Governments are authorised and they take into account the actual market value considering the actual expenses involved, the price of the sugarcane, etc., and they fix the State Advised Price (SAP). If only the State Advised Price is paid, the ordinary small and marginal farmers can survive," the High Court said. .The Court made the observations while 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. 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.However, the Court realised 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. "Thus, it can be seen that the power to issue a command to the sugarcane grower is coupled with the duty to fix the minimum price and to recover the dues if any as arrears of land revenue. It can be seen in the instant case 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 realising the price after issuing a statutory mandate to the farmers," it said..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..Advocate S Muthukrishnan appeared for the petitioner. Additional Advocate General S Silambanan and State Government Pleader P Muthukumar appeared for the respondent TN government, the State Commissioner of Sugar, and the Cuddalore District Collector. Senior Counsel PH Aravind Pandian and advocate B Dhanaraj appeared for the official liquidator. Senior Counsel PS Raman and advocate TK Baskar appeared for Kals Distilleries, the company that took over both units of Aarooran Sugars. .[Read Order]