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UP cane arrears stand tall at Rs 3,000 cr, even as Yogi govt nears 100 days

Settlement of cane dues within 14 days of supply at mill gates was a key pre-poll promise of the BJP

Virendra Singh Rawat  |  Lucknow 

Yogi Adityanath
Yogi Adityanath. UP had topped domestic sugar production by clocking record output at 8.75 million tonnes 

Even as the government in Uttar Pradesh is on course to its first 100 days in office by June end, the sugarcane arrears stand tall at Rs 3,000 crore.

The settlement of cane dues within 14 days of supply at sugar mill gates was one of the flagship pre-poll promises of the ruling Bharatiya Janata Party (BJP) in the state.

Soon after coming to power, Yogi had issued a stern warning to private sugar millers to ensure payment of dues within the stipulated time lest strict penal action was taken.

However, the arrears have still not touched the level of 90 percent in the current crushing season. Against total payables of a little over Rs 25,386 crore, the mills had collectively paid Rs 22,402 crore as per the latest available data. This leaves Rs 2,984 crore as pending on mills, wherein private units owe the substantial amount of Rs 2,574 crore for the current season.

Besides, the private mills owe Rs 40 crore and Rs 62 crore in arrears for the 2014-15 and 2015-16 crushing seasons respectively, which totals Rs 102 crore. Additionally, the mills are supposed to pay interest at the rate of 15 per cent on arrears if they are unable to pay farmers within 14 days.

Last month, the cane department had slapped Rs 227 crore on mills in interest penalty over their failure to settle farmers’ payments within time. Now, this amount is likely to balloon further over the still remaining arrear portion.

On April 20, a delegation of (UPSMA) comprising sugar mills owners had met Yogi and submitted a memorandum demanding a viable cane pricing and revenue sharing formula to insulate the sector from pricing and cyclical fluctuations.

The industry also put forth its long pending demand of de-reservation of molasses, a sugar byproduct, so that the mills’ profitability could increase and help speedier settlement of arrears.

Meanwhile, UP had topped domestic sugar production by clocking record output at 8.75 million tonnes (MT) compared to 6.82 MT last year, thus clocking 40 percent higher production.

Last year, the total payables to UP cane farmers had stood at about Rs 18,000 crore, which has increased to over Rs 25,000 crore, a jump of nearly 40 percent, although the cane price was also higher this season. The state cane price effective for the current season was hiked by Rs 25 from Rs 280/quintal to Rs 305/quintal for normal variety. The previous cane price hike was announced in 2012-13 from Rs 240 per quintal to Rs 280 per quintal.

There are 116 sugar mills in UP, of which the bulk of 91 belong to the private sector, followed by cooperative sector at 24, while UP State Sugar Corporation Limited (UPSSCL) accounts for a single operational mill.