Sugarcane payment arrears to farmers by mills in Uttar Pradesh (UP) have crossed Rs 2,100 crore, reviving a problem that the Yogi Adityanath-led BJP state government seemed to have managed well till recently.
UP mills have in the current 2017-18 sugar season (October-September), as on Wednesday, bought cane worth Rs 15,481.73 crore at the state advised price (SAP) of Rs 315 per quintal for normal and Rs 325 per quintal for early-maturing varieties. Out of this, Rs 12,690.43 crore is the amount due within 14 days of cane delivery. But as per official data, mills have so far paid only Rs 10,582.34 crore, translating into arrears of Rs 2,108.09 crore.
Mills in the state started crushing operations this time on October 25. Significantly, till about a month ago, the unpaid dues weren’t much. In fact, cane arrears on December 1 were minus Rs 141.01 crore, as mills paid more than what was due before 14 days. The arrears rose to Rs 304.09 crore on December 15 and Rs 851.20 crore by December 29, before spiraling to over Rs 2,100 crore.
“These would only mount further because we have crushed only 485.93 lakh tonnes (lt) of cane and produced 49.73 lt sugar till now. Sugar output will top 100 lt this season and we are still barely halfway,” said a Bijnor-based miller.
He attributed the rising arrears to ex-factory sugar prices in UP crashing from over Rs 37 per kg at the season’s start to Rs 31.50-31.75 now. “They were ruling at Rs 34 even in December-end, but have since plunged below Rs 32, which makes paying the SAP near-impossible,” he claimed.
But the problem isn’t limited to UP. Maharashtra mills have also run up arrears of Rs 1,843.80 crore, based on latest data till January 15: Out of the Rs 8,342.20 crore due to growers at the Centre’s fair and remunerative price (FRP), they have collectively paid only Rs 6,632.93 crore, with some mills paying more than the FRP. On Wednesday, ex-factory rates of S-30 grade sugar from Maharashtra, at Rs 28.5-29 per kg, were even lower than for UP.
A miller from Sangli blamed the situation entirely on “traders manipulating the market”. The 2017-18 season began with sugar stocks of 40 lt. That, together with projected production of 261 lt, translates into total availability of 301 lt. After deducting domestic consumption of 250 lt, the ending stocks on September 30 would be 51 lt.
“That is equal to 2.5 months of consumption, which is also the prescribed normative opening stock requirement. Given this fine supply-demand balance, how are prices being driven down like this?,” the miller pointed out.
However, Praful Vithalani, president of the All India Sugar Trade Association, attributed “competition among millers to sell” as the main reason for prices sliding. “Mills believe that sugar output would go up significantly in 2018-19 and, hence, want to sell more now. And when prices are falling like this, traders obviously want to buy less,” he noted.