However, mills have cleared around 92 per cent of the cane prices payable to farmers for the 2015-16 season that will end in September.
This has been made possible by several government measures and also a 40 per cent rise in retail sugar prices since the start of the season.
The total of sugarcane dues for the season so far is estimated to be Rs 4,225 crore, of the cumulative dues of Rs 52,900 crore. Of the former, 47 per cent or Rs 1,975 crore is from Uttar Pradesh, home to all major sugar companies.
Of this, around Rs 1,600 crore or 81 per cent is to come from these five mills. UP mills had to pay around Rs 14,000 crore to farmers in this season, of which Rs 1,975 crore or 14 per cent is pending.
In Maharashtra, the country's biggest sugar producer, the official statement shows 96 per cent of sugarcane dues have been cleared and only Rs 590 crore is pending. In Karnataka, 94 per cent of the dues have been settled so far.
The three states account for a little over 80 per cent of all sugar produced in the country. “It is only in UP where it seems farmers are not being paid for the cane sold,” a senior official said.
In the 2014-15 sugar season, cane payment arrears had peaked to Rs 21,800 crore in April 2015, now brought down to Rs 684 crore.
The Centre had announced a series of measures to help mills clear their pending dues. These included a direct production-linked incentive in lieu of exports, soft loans of around Rs 6,000 crore, fixing a higher price for ethanol and directing oil marketing companies
to purchase at this rate. These steps and an overall drop in production in 2015-16 due to drought in several parts of Maharashtra and Karnataka pushed up sugar prices. This prompted the Centre to withdraw all its export incentives.
Officials said the Centre feels mills charging anything more than Rs 34 per kg (ex-factory) for sugar is unjustified and should be controlled. While millers feel, given the rate of recovery from cane and falling cane supplies, an ex-factory price of at least Rs 37 a kg is justified. This should translate into a retail sugar price of about Rs 44 a kg or Rs 3-4 a kg more than the prevailing rate.
India’s sugar production in 2015-16 is estimated to be 25-25.5 million tonnes, while consumption is estimated at 26 mt.