Recently, six new licenses have been issued for the establishment of six new khandsari units to participate in the the coming crushing season 2018-19. These units would come up at Shamli, Bareilly, Sitapur and Meerut districts in Western and Central Uttar Pradesh. Besides, licenses of four other units are under process.
During the last 2017-18 sugarcane season, only 165 of the total 1,078 licensed khandsari units had been functioning, since most of them had closed down over the years.
To boost such units, the government had recently amended the Khandsari Policy to encourage gur and khandsari units so that a greater number participated in the crushing season and provided a viable option to cane farmers for supplying their crop for upfront payment.
Under the new policy, to obtain licenses for a new khandsari unit, the required radial distance from the nearest sugar mill has been reduced to 8 km from 15 km earlier. Besides, provision for submitting online application for new licenses was made and the restriction to increase the pre-approved size and type was eliminated for faster processing of applications.
The main advantage of gur and khandsari units is that they offer spot payment to farmers without tedious supply and weighing hassles vis-à-vis sugar mills, who are allowed a window of 14 days to settle payments. Even then, there has always been the build up of arrears.
A senior cane department official said that the decision to promote khandsari and gur plants was producing encouraging results on the ground, with the local farmers also supporting the move.
The domestic sugar sector is passing through a crisis brought about by high outstandings of over Rs 170 billion, with UP alone accounting for roughly Rs 110 billion. The UP millers have been seeking a bailout package from the government to participate in the next crushing season.
UP Sugar Mills Association (UPSMA) has demanded Rs 40/quintal incentive on the cane crushed by private millers during 2017-18. The millers have claimed that due to lower realisation from sale of sugar and byproducts against the comparatively higher cost of production, their payment capacity has been impaired. As such, banks were not advancing loans to them owing to huge payment liabilities and unsold stock, while they were unable to carry out necessary repair works in their respective mills for the next season.