Panel considers a Gujarat-like model of staggered payments to cane growers

Farm leaders object to Gujarat-like model, say can't take pay in tranches

A panel constituted by the Centre to evaluate suggestions made by NITI Aayog for a comprehensive reform in the sugar sector is looking at a Gujarat-like model of staggered payments to sugarcane growers.

The panel, which comprises of senior officials from the Union and state governments, was formed some months back to evaluate the suggestions made by a NITI Aayog Task Force on the sugar sector and come out with recommendations.

So, what exactly is the staggered sugarcane payment model?

Unlike in the North and several other parts of the country where sugarcane farmers are entitled to get full payment within 14 days of delivering the cane to mills, in states like Gujarat the payment is made in tranches.

This, according to votaries of the system, ensures that mills are not compelled to dump sugar in the market during the peak crushing months to generate cash in order to pay within 15 days. It also ensures that farmers’ dues aren’t carried forward and they get paid in the same year, they say.

“In Gujarat, most sugar factories are in the cooperative sector and make 30 per cent of the payment within 15 days of delivery of sugarcane. The next round of payment is made after the factories close in April and the third and final round before Diwali,” Ketan­bhai C Patel, vice chairman of Gujarat State Federation of Cooperative Sugar Factories told Business Standard.

Patel said the system has ensured that not a single rupee is carried forward as arrears in Gujarat and all farmers get their payment within a few months of delivering cane to the mill.

“That apart, we are also able to pay a higher price to farmers in excess of Rs 350 per quintal, which is not the case in Uttar Pradesh and Maharashtra,” Patel said. He added that staggered payment can work for private mills of UP as well, which have the highest dues.

According to a statement made in Parliament by Food Minister Piyush Goyal, sugarcane dues as on January 31 in the 2020-21 season that started in October were estimated to be about Rs 17,000 crore, of which UP alone accounted for about Rs 7,600 crore.

This could have grown manifold since then as crushing has continued at a brisk pace in most parts of the country.

The Indian Sugar Mills Association (ISMA), according to sources, has also, in a letter to the panel, backed the staggered model of payment within 90 days of delivery. However, the proposal might not find much favour from farmers.

VM Singh, convenor of Rashtriya Kisan Mazdoor Sangathan (RKMS), said the system will hurt the interests of sugarcane farmers and create another monster just like the government has done with the farm laws.

“When the farmer is not able to pay the price of fertilizers and other inputs required to grow sugarcane in installments, how can he be asked to take return for the same crop in tranches,” Singh said.