Federation chairman Narendra Borgaonkar told The Financial Express that the decision was taken at Tuesday's board meeting. The release of one lakh bags of sugar (10,000 tonnes) will lead to a loss of Rs 3 crore to the sugar cooperatives.

The decision is believed to have been taken in view of the state government's alleged vindictive attitude towards the cooperative sector.

The government in its communication had requested that 18,500 tonnes of sugar should be released as it wanted to distribute it at the rate of one kg each to ration card-holders through the public distribution system. The government stated that the federation had made available 35,000 tonnes of the commodity in the last three years.

The federation's decision is significant as the ruling Shiv Sena-BJP government has chalked out a comprehensive plan to "purify" the Congress ruled cooperative movement in the state. The government had already initiated several moves against cooperatives to establish its supremacy. It had changed the zoning pattern allowing non-members to sell sugarcane to any factory.

The federation on Tuesday had appealed to the state government to stay the recent hike in power tariff and water cess on agricultural consumers. It demanded that the purchase tax on sugarcane be exempt for October 1 to November 15, 1998 and April 15, 1999 onwards to enable crushing of maximum available sugarcane.

Of the total production of 536 tonnes of sugarcane in the 1998-99 season, 482 tonnes will be available for crushing though the requirement will be 452 tonnes. The federation expects the crushing season to be more than the customary 160 days.

The cabinet-sub committee had also finalised the first advance for the next crushing season for the sugar cooperatives at Rs 560 per tonne, a rise of Rs 20 as compared to previous year. The second advance will be Rs 100.

The meeting was attended by cooperation minister Jaiprakash Mundada, minister of state for cooperation Pratapsinh Mohite-Patil, minister of state for agriculture Harshvardhan Patil, federation chairman Narendra Borgaonkar, Maharashtra State Cooperative Bank chairman Vishnuanna Patil, cooperation secretary S Husain and sugar commissioner Arvind Reddy.

On the centre's recent decision to delicense the sugar industry, Mundada assured the federation that a separate meeting will be convened to discuss the issue.