UP understating arrears on sugar payment: Millers

The Mulayam Singh-led Uttar Pradesh government has reported sugarcane payment arrears figures which, according to the sugar millers in the state, are significantly lower than the actual figures.

The latest sugarcane arrears figure, reported by the UP cane department to the Directorate of Sugar at the Centre, was Rs 683 crore (or 9 per cent of the total payable price) on March 15. The total cane price payment on the same date was Rs 6,910 crore whereas the price payable stood at Rs 7,593 crore in the state.

"The minimum cane arrears in the state must be Rs 1,200-1,400 crore, with the average arrears on different mills ranging between 14-15 per cent," said an industry source.

"The state government is purposely reporting lower figure of arrears because of the elections and it does not want to project itself negatively as millions of farmers in the state are directly associated with sugarcane," said a UP sugar miller. The 9 per cent figure is lower than the 11.65 per cent arrears at the national level over the same period.

The national arrears stood at Rs 2,256 crore while the total price payable was Rs 19,380 crore. Mills are unable to make timely payments as they are burdened with higher cane prices, lower realisations on sugar and higher carrying cost, interest charges, etc.

"Today we are crushing cane worth Rs 1,400 to produce one quintal of sugar that is fetching a price of Rs 1,250 a quintal. Under such circumstances, making full payment is becoming impossible," said Sanjay Tapriya, director (finance), Simbhaoli Sugars.

Industry expects the total cane arrears in the state at the end of crushing to be around Rs 2,000 crore.

The issue of cane arrears will be one of the biggest challenges for the new government that would take charge late in May, said an industry source.