Madras HC: FRP Set By The Union For Sugarcane Farmers Similar To Minimum Wages, Rather Than A Fair Price

Recently, the Madras High Court stated that the Fair and Remunerative Price (FRP) set by the Union government for sugarcane farmers is similar to minimum wages, rather than a fair price. The bench comprising Acting Chief Justice T Raja and Justice D Bharatha Chakravarthy highlighted that only by paying the higher State Advised Price (SAP) could small and marginal farmers survive.

The FRP is the mandated price that mills must pay farmers for the sugarcane procured from them, as specified by The Sugarcane Control Order, of 1966. Additionally, state governments set an SAP, which is generally higher than the FRP and considers transportation costs and other local factors that impact sugarcane farmers.

During a public interest litigation (PIL) hearing filed by P Ayyakannu on behalf of sugarcane farmers from Thanjavur and Cuddalore districts in Tamil Nadu, the Madras High Court made observations. The PIL revealed that farmers from the two districts were owed over ₹157 crore for the years 2013 to 2017 by Aarooran Sugars Limited, the company to which they had provided sugarcane.

Aarooran Sugars Limited argued against the PIL and stated that the affected farmers had agreed to settle for 57 percent of the FRP owed to them after participating in proceedings before the National Company Law Tribunal (NCLT), Chennai. However, the court discovered that only 10 percent of the farmers whose dues remained unpaid had agreed to this settlement.

The court expressed its regret that farmers had to approach it for their dues, which were not a favor but payment owed for providing sugarcane to a private company. The court discovered that Aarooran Sugars Limited had stopped crushing operations since 2018-19 and was undergoing liquidation proceedings. The company owed ₹157.71 crore to 14,000 cane farmers according to SAP and ₹78.48 crore according to FRP. The liquidator had only approved a payment of ₹45.02 crore to the farmers, however, they had not yet received the full amount.

The Madras High Court held the Tamil Nadu government responsible for not fulfilling its responsibility to protect the rights of these farmers.

The Madras High Court ordered that eligible farmers be paid the full FRP if not the SAP, and instructed the Tamil Nadu government to pay the outstanding amount due to the farmers within the next three months.