Hardly two months into the start of crushing operations for the new sugar season, mills in Uttar Pradesh and Maharashtra have piled up almost Rs 11,000 crore in payment dues to farmers. The arrears could peak towards April, just when voting for the ensuing Lok Sabha elections takes place. The two states account for almost 75 per cent of the sugarcane grown in the country.
According to the latest data from the Maharashtra government’s Commissionerate of Sugar, mills in the state, as on December 31, were to have paid growers Rs 7,450.90 crore for cane at the “fair and remunerative price” or FRP of about Rs 245 per quintal declared by the Centre for the 2018-19 season (average rate, after deducting harvesting and transport charges from field). But they had only managed to pay Rs 2,875.37 crore, which translates into arrears of Rs 4,575.53 crore.
It is worse in Uttar Pradesh, where mills are still to pay. Rs 1,770.18 crore out of the total Rs 35,463.68 crore value of cane supplied by farmers in the 2017-18 season (October-September). For the current season, they have, till January 4, bought cane worth Rs 10,051.02 crore at the state government’s average state “advised” price or SAP of around Rs 320 per quintal. Out of this, they were to pay Rs 7,210.11 crore within the stipulated 14-day period from the date of cane delivery. But payments so far have been just Rs 2,857.03 crore, with the resulting arrears at Rs 4,353.08 crore, and Rs 6,123.26 crore overall.
In Maharashtra, as many as 74 of the 181 operational factories haven’t paid any money till now in the ongoing season. The bulk of these are in the southern districts of Kolhapur, Sangli and Satara, where the sugar recovery rates, at 12-13 per cent of cane crushed, are way above the state average of 11.25 per cent or so.
“Normally, we pay the FRP as a first instalment to farmers within 14 days of their supplying cane. Depending upon the factory’s earnings from sugar and by-products (molasses, alcohol, bagasse, co-generated power, press-mud, etc.) they get a second payment close to the end of the crushing period (by March) and a third before Diwali (September-October). This is the first time we haven’t been able to pay even the first instalment,” admitted the chairman of a leading Kolhapur-based cooperative sugar mill.
He attributed this partly to the FRP itself which, being linked to sugar recoveries, works out to Rs 280-300 per quintal in southern Maharashtra, as against the Rs 245 average for the state as a whole. “At current ex-factory sugar realisations of Rs 2,900 per quintal, we cannot afford to pay more than Rs 230 per quintal. We have proposed splitting the FRP, so as to pay Rs 230 now and the balance Rs 50-70 during the next Diwali season. But farmers aren’t agreeing to this,” added the chairman.
Raju Shetti, farmer leader and sitting Lok Sabha MP from Hatkanangle in Kolhapur, ruled out any payment of the FRP in instalments. “Any cane price below the FRP is totally unacceptable. Let the mills and the government figure out how to pay this. When the Centre has fixed the minimum sale price of sugar in Maharashtra at Rs 2,900 per quintal, what stops it from raising the same to enable mills to pay the FRP?” he asked.
In Uttar Pradesh, farmers like Shubham Malik from Lak village in Shamli district have not been paid even for the 2017-18 season’s cane. “I supplied 344 quintals during the last season to the Upper Doab Sugar Mills here, which was worth Rs 1,10,000. The last payment I received was for delivery till March 23 and the factory still owes me Rs 40,000. For the current season, I have already supplied over 100 quintals. And I have no clue when the payment for this cane will come,” said Malik.
In Uttar Pradesh too, mills are blaming low sugar prices for the inability to pay SAP to farmers. At ex-factory rates of Rs 3,100-3,150 and average recovery of 10.9 per cent, mills can realise Rs 338-343 from every quintal of cane that is crushed. Against this value, the maximum working capital that banks would extend is roughly 85 per cent or Rs 287-292. “Since some 15 per cent of this money also has to go for meeting other expenses (salaries, gunny bags, chemicals, repairs, etc), we can, at today’s sugar prices, pay farmers only Rs 244-248/quintal,” said a miller from Muzaffarnagar.
Rohit Pawar, president of the Indian Sugar Mills Association, projected cane arrears across India to top Rs 20,000 crore by April. Much of this will be in the two BJP-ruled states of Uttar Pradesh and Maharashtra.
“Kisan ki pareshani abhi sirf ganna aur gai hai (farmers have only two worries now: cane and cow),” said Malik, referring to the growing problem of standing crops being eaten by stray cattle, allegedly due to the Uttar Pradesh government’s anti-slaughter actions.