Cane Arrears & FRP Payment Discipline

Imagine selling a perishable crop to a single large buyer, with no real alternative market to sell it to instead, and then having to simply trust that buyer will actually pay you promptly rather than stringing out payment for months while your own household bills come due regardless. That vulnerability is exactly why the Sugarcane (Control) Order mandates that mills pay farmers within 14 days of cane delivery, whether the payment is calculated using the FRP or a state's higher SAP.

The rule has real teeth, mills that miss the 14-day deadline become liable for interest at 15% per annum on the overdue amount, a genuinely punitive rate specifically designed to make delayed payment more expensive than simply borrowing the cash needed to pay farmers on time, rather than leaving mills any financial incentive to string out dues.

Compliance has generally improved over recent seasons but remains uneven, Maharashtra's mills had cleared 99.02% of their FRP obligations for the 2025-26 season by June 2026, with roughly Rs 396 crore still outstanding, while national data for prior seasons showed similarly high but never quite complete clearance rates, meaning arrears, even when a small percentage of the total, can still represent hundreds of crores owed to farmers at any given time.

These arrears numbers are one of the clearest health indicators for the entire sugar sector, when a state's mills are clearing 99%+ of FRP dues promptly, that reflects genuinely healthy mill cash flow, when arrears mount instead, that's usually the sugar-sector equivalent of a broader profitability problem showing up first in the one place regulators and the public actually track closely, what farmers are owed.