UP asked to ensure timely settlement of sugarcane farmers' dues

Saying it was the responsibility of state governments to ensure that farmers were paid on time, union Food Minister Ram Vilas Paswan on Friday asked Uttar Pradesh to ensure timely settlement of arrears due to sugarcane farmers.

Following a meeting on the issue in New Delhi with states' ministers on Thursday, Paswan told the media here that the central government was considering the various demands raised by the sugar industry to help the beleaguered sector in the backdrop of falling sugar prices.

"Our priority is payment to farmers, while also ensuring that the sugar industry does not turn sick," he said.

He also said the sugar industry had urged the government to create a buffer stock of 10 percent of the annual sugar production to support falling sugar prices.

"We will have to ensure that any fresh buffer stock created is also utilised within a fixed time span lest it perishes," he said.

The food ministry will recommend a hike in the sugar import duty to 40 percent to check falling prices of the commodity and enable mills to clear cane payments arrears, Paswan on Wednesday said after a meeting in New Delhi with various farmers organisations.

"Problems of cane farmers are complex. There were 14 farmers organisations present in the meeting. They made five key demands, including complete ban on sugar import or a hike in import duty and creation of a buffer stock of three million tonne," Paswan said.

"We will write a letter to finance minister proposing an increase in import duty on sugar to 40 percent," he added.

"We will take all measures to protect farmers' interest," the minister said, adding that other demands would be discussed on Thursday here at a meeting he has convened with the chief ministers of 13 cane producing states.

Last August, the central government raised the import duty on sugar to the current 25 percent from 15 percent as a measure of relief to millers beleaguered by higher cane prices and surplus stocks.

Prices fell below the cost of production in some states with the country producing surplus sugar for the fourth consecutive year.

Prices for mills in Uttar Pradesh, for instance have fallen below Rs.25 per kg, while the cost of production remains at Rs.37 per kg.

In June, Paswan said import duty could be raised to 40 percent from 15 percent.

Mills in Uttar Pradesh, the second biggest producer in the country, owe farmers over Rs.5,000 crore, which they have not paid due to lower sugar prices.

The close to 100 private sugar mills in Uttar Pradesh have been at loggerheads with the state government, which makes sugar companies pay a premium to farmers over the cane price fixed by the Centre.

The Centre has recently provided a subsidy of Rs.4,000 per tonne for the export of 1.4 million tonne of raw sugar to improve the cash-flow of the millers.

The Indian Sugar Mills Association has been demanding that the government give exports subsidy, create 2 million tonne buffer stock and restructure millers' debts.

"The credit ratings of sugar companies in Uttar Pradesh are falling and are much lower than those of firms in the west and south, making it difficult to get funds. We face major liquidity problems," said Gursimran Mann, managing director, Simbhaoli Sugars.