UP sets August 31 deadline for mills to settle Rs 8,200 crore cane arrears

Bajaj Hindusthan, Simbhaoli among top defaulters in setting farmers' dues

With the 2019-20 sugarcane crushing cycle barely two months away, the Yogi Adityanath government has set an August 31 deadline for mills in Uttar Pradesh, the country’s top sugar producer, to settle farmer dues, of more than Rs 8,200 crore, for the current season.

Against total cane payables of Rs 33,047 crore, UP mills have, so far, paid 75 per cent or Rs 24,792 crore to farmers, thus leaving 25 per cent or Rs 8,255 crore in arrears for the 2018-19 season.

During the corresponding period last year (2017-18), the unpaid component stood at Rs 11,161 crore or about 32 per cent of the amount payable. 

The central and the state governments had announced separate soft loan schemes for helping private sugar mills pay farmers in the backdrop of sugar market glut, export market squeeze and falling sugar prices.

The state cane commissioner, Manish Chauhan, holding a meeting with the representatives of private mills here on Wednesday, had issued stern directives for ensuring full payment by August 31. They were also instructed to complete their annual repairing and maintenance at the earliest, so that mills could start operations on time for the upcoming sugar season (October 2019-September 2020).

Private mills account for nearly 95 per cent of total arrears in the state at Rs 7,800 crore, followed by UP cooperative units at Rs 430 crore. Among top cane payment defaulters are Bajaj Hindusthan group mills (more than Rs 2,800 crore outstanding), Simbhaoli (Rs 600 crore), Modi (465 crore), and Dhampur (Rs 354 crore).

Last month, the government had warned defaulting mills of filing of cases under Section 3/7 of the Essential Commodities Act (ESA), 1955, and issuance of recovery certificates (RC), which authorise district administration to seize a plant and the stock for auctioning, if farmer dues were not paid on time.

In fact, Chief Minister Adityanath had asked mills to settle their outstanding and stressed any delay in clearing arrears would not be tolerated.

“Sugarcane payment is incumbent on the liquidation of stock and it is the responsibility of the government to facilitate the sale. We have been given limited quota for selling sugar and are facing the double whammy of maintaining inventory and not able to sell as well,” an official with a leading sugar company told Business Standard.

He lamented the government was not extending any support to mills in the present crisis and private millers have been ‘bluntly’ told to explore other sources of funding for settling outstanding. “We have apprised the state government of the tight liquidity situation with us, which is primarily responsible for arrears.”

Recently, the Cabinet Committee on Economic Affairs (CCEA) had approved the creation of 4 million tonnes (MT) of sugar buffer for a year. It is aimed at supporting the sugar industry through cash support and improving the demand-supply matrix in the domestic market.

“However, the buffer stock policy is applicable to mills enjoying CC (cash credit) facility with banks, while a majority of the smaller groups are out of its purview. In fact, they are in dire need of such government support than big sugar companies,” he noted.

In 2018-19 crushing cycle, 119 sugar mills, including 94 private, 24 cooperative and a UP State Sugar Corporation unit, had participated in crushing operations. The state sugar output stood at about 11.8 MT compared to over 12 MT in 2017-18.