Allahabad HC seeks report on sugarcane dues

The orders were passed on the PIL filed by Rashtriya Kisan Mazdoor Sangathan president V M Singh seeking payment of cane arrears and other dues

The bench of the Allahabad high court (HC) here on Thursday directed Uttar Pradesh to tell the court what had been done to settle sugarcane dues of Rs 2,600 crore.

The HC has directed the principal secretary of sugar industry and cane development, Rahul Bhatnagar, to give an affidavit by September 17.

It asked for a detailed chart on the dues, interest payments and cane society  commission.

The orders were passed on a public interest suit by Rashtriya Kisan Mazdoor Sangathan president V M Singh seeking payment of dues. The case would be heard in the first week of October.

On July 4, the HC had directed the state to ensure the settlement of dues in six weeks, giving priority to flood-affected districts.

At that time, the arrears stood at around Rs 4,000 crore, which come down to about Rs 3,000 crore at the end of 6 weeks’ time.

Yesterday, the court had contented before the HC that interest payment upon arrears was not the right of farmers and it depended upon the discretion of the government.

Last week taking a tough stance against private sugar mills defaulting on cane arrears, the state had issued Recovery Certificates (RCs) against 5 units, whose payment percentages figured amongst the lowest.

The state’s action had caused much consternation amongst the millers, who have long been claiming they were moving towards sickness due to higher cost of production vis-à-vis sugar prices in UP.
 
The sugar companies are understood to be even considering not to run their units in case the government turns on the heat over the issue of cane arrears and if there is no pro-industry gesture from the Akhilesh regime. The industry had even demanded soft loan of Rs 2,000 crore from the government to settle dues.
 
UP sugar industry produces nearly 30 per cent of India’s annual sugar output. The sugar industry has been claiming mounting losses and unviable business environment due to high sugarcane price vis-à-vis sugar prices have pushed the millers to corner.

The sector is embattling multiple challenges of massive sugarcane arrears, flat sugar prices, huge carryover stock in domestic market, bleak global sugar price forecast, refusal of banks to extend loan etc.

Every crushing season, UP government announces State Advised Price (SAP) for sugarcane, which is much higher than the Fair and Remunerative Price (FRP) of the Centre. The mills have to compulsorily pay SAP to farmers for procurement.

The industry laments while SAP in UP increased from Rs 165/quintal in 2009-10 to Rs 280/quintal in 2012-13, the corresponding hike in sugar price had only been from Rs 28/kg (2009-10) to Rs 31/kg in 2012-13.

During the 2012-13 crushing season, the mills alone had purchased sugarcane worth Rs 22,462 crore.

UP sugar economy is estimated at Rs 30,000 crore, including procurement of cane by mills; unorganised ‘khandsari’ (unpolished sugar) and gur (jaggery) units; and local sales.