UP cracks the whip on private mills for not paying sugarcane farmers

Leading sugar mills told their assets will be seized if they fail to settle farmers' arrears for the 2017-18 crushing season.

Uttar Pradesh has warned eight leading sugar mills their assets will be seized if they fail to settle farmers’ arrears for the 2017-18 crushing season despite getting a Rs 40 billion soft loan package.

The state’s sugarcane department has issued recovery certificates to eight mills in Ghaziabad, Bulandshahar, Hapur, Saharanpur, Badaun, Maharajganj, Basti and Baghpat districts belonging to Bajaj Hindusthan Sugar Ltd., Simbhaoli Sugars, Wave Industries, Modi Sugar Mills and other companies.

A recovery certificate empowers district magistrates to seize the movable and immovable properties of sugar mills and auction them to recover farmers' arrears. It’s estimated private millers owe Rs 25 billion to farmers for the 2017-18 crushing season when sugarcane worth Rs 354 billion was sold to 119 mills.

Uttar Pradesh cane commissioner Sanjay Bhoosreddy told Business Standard top eight defaulters were served recovery certificates after they didn’t heed warnings to settle arrears. However, the government will allow the mills some more time to pay farmers.

“We have employed a calibrated and judicious approach to deal with the sugar companies and the soft loan package of Rs 40 billion was also aimed at easing their paying capacity. However, some mills continued to be laggard and we had to issue the RCs (recovery certificates),” said Bhoosreddy.

Mills have produced nearly 2 million tonnes (MT) of sugar in the 2018-19 season. Coupled with the last year’s carry-forward stock of 4 MT, their inventories are inflating amid a negative outlook for the sugar market.

A sugar industry spokesperson on condition of anonymity said the sugar prices had fallen in UP further and fresh production would further add to the unsold stock.

Against the loan package of Rs 40 billion, mills had been sanctioned loans worth more than Rs 26 billion.