Agriculture – Gujarat Government Clears Long-Pending Sugarcane Payment Approval

Agriculture –  Gujarat Chief Minister Bhupendra Patel has approved a major decision aimed at supporting sugarcane growers and strengthening the cooperative sector in the state. The move grants official recognition to sugarcane prices paid by cooperative sugar mills to farmers between the financial years 2007-08 and 2014-15.

The announcement was shared by Agriculture and Cooperation Minister Jitubhai Vaghani, who said the approval is expected to provide financial relief worth nearly Rs. 1,500 crore to sugar cooperative societies across Gujarat. More than two lakh sugarcane farmers are likely to benefit directly from the decision.

Relief for Cooperative Sugar Mills

According to the state government, cooperative sugar factories in Gujarat had been facing significant tax-related complications for several years. The issue emerged because sugar mills in the state were paying farmers prices above the Fair and Remunerative Price (FRP) fixed by the Central Government.

The Income Tax Department had earlier treated the additional amount paid to farmers as profit earned by cooperative societies. As a result, tax demand notices were issued to several sugar cooperatives, creating a major financial burden linked to the period from 2007-08 to 2014-15.

With the latest approval granted by the Gujarat Government, cooperative sugar societies are expected to receive much-needed financial protection from those liabilities.

Farmers Received Better Returns in Gujarat

State officials noted that Gujarat’s cooperative sugar sector has traditionally offered higher payments to farmers compared to several other states. This was possible because sugar cooperatives generated revenue not only through sugar production but also through by-products such as ethanol, molasses, and electricity generation using cogeneration facilities.

These additional revenue streams allowed sugar mills to pass on better returns to sugarcane growers. The government believes the latest move acknowledges the role played by cooperatives in improving rural incomes and strengthening the agricultural economy.

Impact of Changes in Income Tax Rules

The issue saw progress after the Central Government introduced amendments to the Income Tax Act in 2023. The changes were made following efforts by the Union Ministry of Cooperation, established under Prime Minister Narendra Modi’s government.

Under the revised provisions, sugarcane prices approved by state governments received legal recognition for income tax purposes. This amendment provided states with the authority to validate higher payments made by cooperative sugar mills to farmers.

Following the changes at the national level, Chief Minister Bhupendra Patel formed a high-level committee to examine the matter and provide recommendations. Based on the committee’s report, the Gujarat Government moved ahead with the approval process.

Government Highlights Farmer-Centric Approach

Minister Jitubhai Vaghani described the decision as an important step in protecting the interests of both farmers and cooperative institutions. He also stated that the government remains committed to ensuring financial stability within the cooperative sector.

The minister expressed appreciation towards Prime Minister Narendra Modi, Union Cooperation Minister Amit Shah, and Chief Minister Bhupendra Patel for supporting measures linked to the cooperative movement and rural development.

Officials said cooperative sugar societies in Gujarat continue to play an important role in direct farmer payments and rural economic activity. More than two lakh sugarcane farmers currently depend on these institutions for income linked to sugar production.

Strengthening the Cooperative Economy

Experts associated with the cooperative sector believe the decision could improve financial confidence among sugar mills and encourage smoother operations in the coming years. The approval is also expected to strengthen the long-standing cooperative model in Gujarat, which has remained closely tied to the state’s agricultural growth.

By resolving an issue connected to historical tax disputes, the government aims to create a more stable environment for sugar cooperatives while ensuring that farmers continue receiving fair compensation for their produce.