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Bitter start to sugarcane season: Rs 8,400 crore in dues from mills to farmers

The last sugar year had also opened with cane arrears, though these weren’t as huge.

Written by Harish Damodaran | New Delhi | Updated: October 5, 2020 7:06:00 am
Bitter start to sugarcane season: Rs 8,400 crore in dues from mills to farmersBy Sep 30, only Rs 27,451 crore had been paid. (Express photo by Arul Horizon)

EVEN AS the new 2020-21 sugar year has started, mills in Uttar Pradesh owe a staggering Rs 8,400 crore-plus of payments to farmers against cane supplies made during 2019-20.

In 2019-20 (October-September), UP mills crushed a record 1,118.02 lakh tonnes (lt) of cane worth Rs 35,898.15 crore at the state government’s ‘advised’ price (SAP) of Rs 315-325 per quintal.

But as on September 30, the end of the last sugar year, they had paid farmers only Rs 27,451.05 crore. That translates into dues of Rs 8,447.10 crore – even before crushing operations for 2020-21 are to begin by the month-end after Dussehra.

The last sugar year had also opened with cane arrears, though these weren’t as huge. In 2018-19, the state’s mills crushed 1,031.67 lt of cane valued at Rs 33,048.06 crore, but had managed to pay Rs 28,106.23 crore by end-September.

The outstanding dues, then, came to Rs 4,941.83 crore.

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“Last year, it was a khaaii (ditch). This time, they have pushed us to a kuaan (well). Worse, the government does not care. Despite the SAP being raised by just Rs 10/quintal (from Rs 305 to Rs 315 for normal and from Rs 315 to Rs 325 for early-maturing varieties) since 2016-17, they aren’t forcing mills to pay even these rates,” said Jitendra Singh Hooda, an 8-acre cane grower from Kheri Bairagi village in Shamli district and tehsil.

The Yogi Adityanath government’s SAP of Rs 315-325 per quintal for 2019-20 was higher than the Centre’s ‘fair and remunerative price’ (FRP) of Rs 275 per quintal, linked to a 10% basic sugar-to-cane recovery ratio. At UP’s average sugar recovery of 11.3% recorded last year, the corresponding FRP would be Rs 310.75 per quintal. As against this, the total payments so far (Rs 27,451.05 crore) divided by the quantity crushed in 2019-20 (1,118.02 lt) gives an average price of just Rs 245.5 per quintal.

“Forget SAP, we are not getting even the FRP fixed by the Centre. The mills are required to pay within 14 days from the date of cane delivery, while crushing ended by May-end,” added Hooda.

A UP industry source attributed the current build-up of arrears mainly to the non-payment of export subsidy and sugar buffer carrying cost. The Centre had, last September, announced a lump-sum assistance totaling Rs 10.448 per kg towards marketing, transport, port-handling and other expenses incurred on sugar exports during 2019-20. Earlier, in July, it approved the creation of a 40 lt buffer stock by mills, for which the entire interest, storage and insurance charges for one year would be reimbursed.

Also Read | Unpaid arrears, no clarity on subsidy programme worry millers; sugar exports may take a hit

“The Centre owes us about Rs 3,000 crore on these two accounts. Besides, another Rs 900 crore is due from the state government against co-generation power sales by mills to the UP Power Corporation Ltd. These together make up nearly half of the Rs 8,400 crore arrears amount,” claimed the source.

He also pointed out that much of the cane price dues are from a few companies. Bajaj Hindusthan Sugar Ltd’s 14 factories alone are yet to pay Rs 2,637.76 crore or 49.4% of their total Rs 5,339.17 crore SAP value of cane in 2019-20.

Others with significant dues include Simbhaoli Sugars (64.01% of total), UK Modi Group (62.56%), Gobind Sugar (55.58%) and Upper Doab Sugar (46.42%).

On the other hand, many companies – Balrampur Chini, Triveni Engineering, Dhampur Sugar, DCM Shriram, KK Birla Group, Dwarikesh Sugar, Dalmia Bharat, Daurala Sugar, LH Sugar and Tikaula Sugar Mills – have paid up 85% or more and are expected to discharge the rest within the next few weeks.

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