Pay sugarcane arrears by May 5 or face music: UP to mills

In the backdrop of the Uttar Pradesh sugar output inching towards 7 million tonnes (MT) and mounting cane arrears, the state government has set the deadline of May 5 for the mills to settle farmers' dues or else face music.

While the state sugar production has touched 6.83 MT, the cane arrears on mills, especially private millers, has already breached Rs 6,500 crore mark. Since, 48 of the 118 mills in UP are still crushing, both sugar output and arrears are bound to increase each passing day.

Yesterday, a meeting to review the state sugarcane payments situation was held here, in which the UP Chief Minister's Office (CMO) issued stern warning to the mills to pay dues by May 5 lest strict action is taken.

The payment schedules of all the defaulting mills have accordingly been revised by state cane commissioner Subhash Chandra Sharma. These include all the big names in the sugar business, including Bajaj Hindusthan, Bira, Wave, Triveni, Dhampur, Dalmia, Indian Potash Limited (IPL), Balrampur, DSCL etc.

Against the total payables of Rs 16,030 crore, the state sugar mills had paid Rs 9,505 crore, which is 59 percent of the total dues. The remaining in addition to about Rs 155 crore as interest payment, comprises cane arrears.

Meanwhile, the mills had crushed nearly 71.63 MT of cane with sugar recovery standing at 9.54. Recovery refers to sugar realisation per unit of cane crushed and higher ratio refers to higher sugar production.

While 48 mill are operational, the rest of the 70 units had wrapped up their crushing season. The mills stop crushing, when cane crop in the area allocated to them during the respective crushing season gets exhausted. The crushing is expected to continue till April last.

The private sector accounts for 94 units of the total 118 units in UP. The cooperative sector comprises 23 units, while one unit is owned by the UP State Sugar Corporation Limited (UPSSCL).

UP Sugar Mills Association (UPSMA) secretary Deepak Guptara said the primary reason for the mounting arrears was the falling retail sugar prices against higher cane price.

Industry also blames the glut in the international sugar market for subdued export markets.

At the start of crushing season, UP had retained the cane price at Rs 280 per quintal, while allowing mills to pay at Rs 240 per quintal upfront and deferring payment of the remaining Rs 40 per quintal at the end of season.