UP sugarcane growers' dues rising

Sugarcane farmers' arrears in Uttar Pradesh are rising by leaps and bounds. The cane growers in the state will have to wait for at least another month to get their payments cleared as sugar mills do not want to curtail their working capital and divert the money to cane farmers.

According to the data released by the Uttar Pradesh Cane Commissioner's Office, the mills owed Rs 1,000 crore to the farmers as on April 20 of the total purchase worth Rs 9,681.03 crore. The mills paid Rs 7,836.08 crore of the total amount of Rs 8,837.06 crore due to the farmers as on April 20. This works out to 88.67 per cent of the payments cleared last week compared with Rs 89.71 per cent of the payments cleared a week before that.

The statistics from the Cane Commissioner's Office indicate that private mills cleared about 91.01 per cent of the sugarcane farmers' dues amounting to Rs 6,613.73 crore, while cooperative federations paid off 84.33 per cent of the dues at Rs 879.39 crore. However, sugar corporations lagged by only 65.08 per cent of the arrears at Rs 342.96 crore.

Distressed by the government policies and lower realisation on the back of a bumper sugarcane production across the world, sugar mills in the country, especially in Uttar Pradesh, have held back farmers' payments.

"We are operating at a loss of at least by Rs 150 a quintal. The realisations from the sugar sales, hence, cannot be diverted to clear the dues. Working capital is of utmost importance, which needs to be met by hook or by crook," said a sugar mill executive. He, however, expressed hope that once the export incentives came into effect, realisations would improve, resulting in an ease in the liquidity crunch for mills.

In Uttar Pradesh, mills pay farmers 15 days after procuring sugarcane and are liable to clear all the pending payments, if any, within the next 14 days, according to the state's sugar laws.

According to the provisional data available with the National Federation of Cooperative Sugar Factories, domestic sugar production as on March 31 was 21.2 million tonnes. Of this, about 11 million tonnes were produced by private sugar mills and the remaining by sugar cooperatives.

Sugar production was 6.9 million tonnes in the corresponding period last year. Maharashtra topped the states with 7.32 million tonnes, followed by Uttar Pradesh at 6.46 million tonnes and Karnataka at 1.9 million tonnes.

According to Prakash Naiknavare, managing director of the Maharashtra Cooperative Sugar Factories Federation, arrears are almost nil in Maharashtra because of the state's unique payment system. The Mantri Committee headed by the chief minister looks after the payment system in Maharashtra, ensuring that farmers are paid fully and on time.

"Within 15 days of cane procurement, farmers are paid the advance sum of Rs 850 a tonne (now revised to Rs 900 a tonne) and the final amount, if any, is settled later " he added.

Generally, the sugarcane arrears were settled at the end of the season between July and September.

Hence, the status of final payment would be known only in August, when the books of accounts get finalised in August this year, Naiknavare added.