Sugarcane arrears have hit a record high, exceeding Rs 6,308 crore, in Uttar Pradesh on delayed payment by millers even as crushing in the current season ending September has come to an end.
However, the rising arrears do not seem to deter UP farmers from planting cane for the next season as no other alternative is seen matching sugarcane in terms of returns since the price is fixed by the State Government.
UP is followed at a distance by Karnataka, the third largest sugar-producing State, where dues to cane growers are estimated at over Rs 1,600 crore.
The all-India cane arrears are said to have crossed Rs 12,300 crore, according to the Food Ministry.
For this build-up in cane arrears, millers blame the high cost of production – driven by a high cane price and lower-than-expected realisations.
Since the beginning of the current season in October, sugar millers in UP have been losing about Rs 4-5 a kg as the ex-factory prices have been hovering around Rs 31-32 a kg while the cost of production is estimated at Rs 36 a kg.
Further, the recent decontrol of sugar sales announced by the Centre has not helped millers to clear cane dues as ample supplies in the market have kept its prices quiet for some time now.
V.M. Singh, Convenor of the Rashtriya Kisan Mazdoor Sangathan, blamed the UP Government’s inaction against sugar millers for the build-up in arrears. Singh has filed a public interest litigation in this context and the next hearing is due on May 16 in Lucknow.
“The UP Government is playing into the hands of sugar mills. By not issuing recovery certificates against the mills, even the State is losing out,” Singh said.
He said the removal of curbs recently on sugar sales had not helped the farmers in any way.
In early April, the UP Government had initiated action against some mills for payment default, but subsequently the Cane Commissioner, Kamaran Rizvi, was transferred. Principal Secretary (Sugar) Rahul Bhatnagar, currently holds additional charge of Cane Commissioner in UP.
“We have held a meeting with the millers and told them to clear the dues by June 30,” Bhatnagar said.
S.L. Gupta, Secretary, UP Sugar Mills Association, said that mills in the State were under pressure to clear the dues and had been selling more sugar since sales were de-controlled. In fact, sugar prices had seen a marginal decline after the decontrol was announced, as it has led to more supplies in the market, Gupta said.
Imports
The increased availability and cheaper imports have led to bearish trend in prices and that millers may need more time to clear the dues.
Meanwhile, farmers continue to plant cane in Uttar Pradesh, where according to early estimates the area covered under is marginally lower than corresponding last year.
As on May 8, sugarcane has been planted on 19.20 lakh hectares in UP, lower by about two per cent over corresponding last year.
Acreage
However, the cane acreage across the country is lower by 11.5 per cent at 40.30 lakh ha against 45.54 lakh ha in the corresponding last year. This decline in cane acreage is due to 45 per cent drop in area in Maharashtra, the largest sugar producing state, on account of prevailing drought and also in Karnataka.
In Maharashtra, farmers have so far planted cane in 5.11 lakh hectares against 9.37 lakh hectares in corresponding last year.
Cane planting has been affected in parts of Marathawada, Pune and Vidarbha regions where second consecutive drought has affected the acreages.
In Karnataka, the decline in acreage is estimated at 10 per cent at 3.27 lakh hectares against 3.65 lakh hectares in corresponding last years.