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25 govt-run UP sugar mills settle Rs 9 bn of cane farmers' outstanding dues

UP govt has allocated Rs 55 billion in the UP Supplementary Budget to bail out the sugar sector from the payments crisis

Virendra Singh Rawat  |  Lucknow 

From the 2018-19 sugarcane season starting October, the Centre not only increased the base recovery rate from 9.5 to 10 per cent, but also raised the premium extra yield in sugar from Rs 2.68 per quintal to Rs 2.75 a quintal

Within a week of Chief Minister Yogi Adityanath setting November 30 as the deadline for private mills in to settle outstanding dues with farmers, 25 government-run mills have settled more than Rs 9 billion of arrears.

On September 25, the CM had asked mills to pay farmers’ arrears by November-end. At that time, the total outstanding for all the 119 mills stood at about Rs 95 billion, of which 94 private mills accounted for over Rs 86 billion pertaining to the 2017-18 crushing season.

Now, 24 UP cooperative sector mills and a Corporation Limited (UPSSCL) unit have settled about Rs 9 billion of dues, of which the lion's share was paid for by the state government. The 24 cooperative mills had paid Rs 8.92 billion, of which Rs 8.85 billion was provided by the state from its Supplementary Budget corpus.

Earlier, the state government had allocated Rs 55 billion in the UP Supplementary Budget to bail out the sector from the payments crisis that threatened to impede the 2018-19 crushing season.

According to the sugarcane department, the lone UPSSCL mill had paid about Rs 300 million, of which Rs 230 million was given by the state government.

The payment burden of all the government-run mills stands effectively cleared. Unlike Maharashtra, where cooperative mills are controlled by cooperative bodies, these UP units are controlled by government nominees.

Meanwhile, private millers still have outstanding dues of more than Rs 81 billion, although payouts have seen a pickup after a nudge from CM Adityanath.

In the 2017-18 crushing season, UP mills had clocked net dues of over Rs 354 billion. The next crushing season is likely to start by the end of October amid an increase in the state's sugarcane acreage and sugar recovery.

Meanwhile, the government has proposed to offer Rs 40 billion as soft loans to private millers for settling farmers' dues. However, the soft loan would be offered to those private mills whose payment ratio was higher than 30 per cent during the last crushing season. The loan would be offered for a period of 5 years and attract an interest rate of 5 per cent. Defaulters would have to cough up an interest rate of 12 per cent.

Earlier, CM Adityanath conceded that the domestic sugar sector was passing through challenging times owing to the crash of international sugar prices.

First Published: Mon, October 01 2018. 21:13 IST