UP sugarcane dues at Rs 7,000 cr as Adityanath's Aug 31 deadline expires

Bulk of arrears owned by Bajaj Hindusthan, Simbhaoli, Modi groups

Even as the August 31 deadline set by chief minister Yogi Adityanath for Uttar Pradesh sugar mills to settle farmers’ arrears expired yesterday, the outstanding amount stands firm at nearly Rs 7,000 crore.

Against net payables of Rs 33,047 crore for the 2018-19 crushing season, the unpaid portion of Rs 7,000 crore represents 20% of the total amount even as the next 2019-20 cycle is less than two months away. Bulk of the outstanding is owed by private sugar mills, topped by Bajaj Hindusthan, Simbhaoli and Modi groups.

The state government had warned defaulters with possible filing of cases under Section 3/7 of Essential Commodities Act (ESA) 1955 and issuance of recovery certificates (RC), which authorises district administration to seize plant and stock for auctioning, if farmers’ dues were not paid on time.

During the corresponding period of last year, arrears of Rs 10,000 crore or about 28% against total payables of more than Rs 35,400 crore were pending for 2017-18 season. However, the payments situation at the time was aided to a large extent by the central and state governments floating separate soft loan schemes to support private millers to pay farmers in the backdrop of sugar market glut, export market squeeze and falling sugar prices.

“Sugarcane payment happens with liquidation of stock and it is the responsibility of the government to facilitate such sale. We have been given limited quota for selling sugar and are facing the double whammy of maintaining inventory and not able to sell,” a private sugar mill official had earlier told Business Standard.

Reviewing the sluggish sugarcane payments situation in UP on June 19, 2019, Adityanath had warned private millers to settle full outstanding by the end of August 2019 and underlined any further delay would not be tolerated. At that time, the arrears stood at almost Rs 10,000 crore. Since then, the arrears component has come down by nearly Rs 3,000 crore or 30% to Rs 7,000 crore.

Recently, UP cane commissioner Manish Chauhan reviewed the cane payments situation of state mills, including sale quota, sugar export and export subsidy matrices.

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

The next sugar season in UP is likely to begin from October end. While Western UP units would start operating after Diwali in the last week of October, the sugar mills in Central and Eastern UP have been asked to start by the end of first and second weeks of November, respectively.

Recently, the Centre announced export subsidy to help the sector against the outstanding of about Rs 12,000 crore on mills pan India.