UP sugar mills saddled with Rs 1,130-cr farmers' arrears

Settlement of arrears within 14 days of sale was a prominent pre-poll promise of the Bharatiya Janata Party
Barely three weeks before the 2017-18 sugarcane crushing gets underway in Uttar Pradesh, the country’s largest sugar producer, the state sugar mills, which are predominantly private sector owned, have arrears to tune of Rs 1,130 crore pertaining to the previous 2016-17 season.

Of the outstanding amount, the private millers owe the bulk at almost Rs 945 crore, or 84 per cent of the consolidated arrears. The remaining Rs 185 crore is due from the state co-operative federation units.


Settlement of arrears within 14 days of sale was a prominent pre-poll promise of the Bharatiya Janata Party (BJP) government in the run up to the UP 2017 Assembly elections.


The 2016-17 crushing season had wrapped up by the first week of May 2017. Although five months have passed, yet the arrears have still not been settled in total.


Earlier, Chief Minister Yogi Adityanath, on several occasions has assured that the cane arrears would be paid in full before the start of the next season. However, this is now a remote possibility with the next season just around the corner.


As per latest data, UP mills - against consolidated payables of Rs 25,386 crore - had collectively paid about Rs 24,256 crore, which leaves Rs 1,130 crore as arrears.


After assuming office, Yogi cautioned mills of strict action if they failed to settle cane payments within stipulated duration. The erring mills were served notices and warned of issuance of the recovery certificates (RC) if they failed to comply. RCs authorise the District Cane Officer to seize unsold stocks and other assets for auction to settle farmers’ payments. However, the defaulting mills are yet to fulfill their obligation.


The sugar industry has long been demanding a viable price and revenue sharing formula in UP to insulate the sugar sector from pricing and cyclical fluctuations. However, no policy decision has yet been taken in the state over successive regimes.


During 2016-17 crushing season, UP topped domestic sugar production by clocking record output at 8.75 million tonnes (MT) compared to 6.82 MT during 2015-16, thus posting 40 per cent higher output.


There are 116 sugar mills in UP - a bulk of 91 which belong to the private sector - followed by cooperative sector at 24 mills, while UP State Sugar Corporation Limited (UPSSCL) accounts for a single operational mill.


Meanwhile, the state price fixation committee has been holding meetings with the various stakeholders for determining the cane price to be paid by mills in the coming season.


On November 18, 2016, the state cabinet meeting chaired by then CM Akhilesh Yadav had hiked the UP cane State Advised Price (SAP) of Rs 280/quintal for common variety to Rs 305.


Likewise, the price for early and unsuitable cane varieties had been raised to Rs 315 and Rs 300 per quintal respectively. Common variety account for the bulk of cane produced.


Earlier, UP SAP had not been revised for the last three consecutive years. The earlier SAP hike was brought into effect in 2012-13, which increased cane price from Rs 240/quintal to Rs 280/quintal.


Sugarcane is a major cash crop in UP and there are over 4 million rural households which engage in cane farming.


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