UP sugarcane outstanding piles up to ~96 bn

Uttar Pradesh has clocked record sugar production of almost 9 million tonnes (mt) in the ongoing crushing season even as sugarcane arrears have piled up to ~96 billion.

So far, the collective payment liabilities of all the 119 sugar mills in UP have added up to a little over ~267 billion, against which mills had paid nearly ~171 billion, thus leaving a massive ~96 billion as dues. This means almost 36 per cent of total dues are arrears with the mills, majority of which belong to private sector at 94. The sugar output of 9 mt has already breached the full season sugar production of about 8.75 mt registered during 2016-17.

Since the mills have been provided with a window of 14 days to clear dues, the actual arrears are pegged at a lower level of ~70 billion. However, given the slow pace of payments and incremental piling up of arrears over the past weeks, the level of arrears are bound to increase further and expected to end up at a much higher level at the end of the crushing season.

Facilitating prompt payment of cane dues had been one of the foremost pre-poll promises of the ruling Bharatiya Janata Party (BJP) in run up to the 2017 UP poll. Later, the Yogi Adityanath government had also underlined commitment towards ensuring timely sugarcane payment to farmers.

One of the major reasons for the piling up of arrears is the fall in sugar prices over the past few months and especially after the UP cane price known as State Advised Price (SAP) was fixed in October 2017.

In his recent address in the UP assembly, Adityanath had said his government had protected the interests of all stakeholders in the sugar sector, including farmers and mills. He had said it was for the first time that mills had been operating freely without the fear of penal action and threat of action by the dispensation, and at the same time, the farmers had been given lucrative level of payments.

In the current season, the Adityanath government is targetting total sugar production of almost 11 MT. While, 94 private mills’ payments ratio stands at 71%, the 24 state government controlled units have emerged biggest laggards notching up 68% in payments. The lone UP State Sugar Corporation Limited (UPSSCL) mill had paid over 104% of farmers’ liabilities.

Earlier this year, the private millers under the aegis of UP Sugar Mills Association (UPSMA) had sought a bailout package from the government to keep industry afloat in the wake of rising arrears. They had also demanded a bailout package in the form of staggered cane payment system, waiver in cane society commission of ~5.10/quintal and subsidy of ~30/quintal of cane crushed for sustenance.