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New Delhi, Sept. 8 The Supreme Court has directed sugar mills in Uttar Pradesh — private, co-operative and State-owned — to pay up all outstanding cane arrears to growers for the 2007-08 crushing season (October-September) at the rate of Rs 110 for a quintal within the next four weeks.

This is lower than the State Advised Price (SAP) of Rs 125 for a quintal fixed by the UP Government for the current season. There is a catch though. The Rs 110 rate payable by factories would be without any deduction of cane transport costs borne by mills.

Mills till recently were allowed to deduct Rs 5.75 a quintal from the SAP for the cane they transported from the primary collection centres to the factory-gate. The transport rebate was further increased to Rs 10.58 a quintal by the Allahabad High Court in an order dated April 21.

However, the Supreme Court, in its order on Monday, has fixed the Rs 110 a quintal price for 2007-08 as a net price to be paid by mills to farmers without deducting any transportation costs. Thus, the cane price to mills at the gate works out to Rs 115.75 a quintal (Rs 120.58, if the higher transport deduction was allowed), which is still below the SAP of Rs 125 a quintal.

The apex court’s order, passed by a bench headed by Mr Justice Arijit Pasayat, is an interim one. The final ruling is likely to take a couple of months, as the apex bench has given four weeks’ time for filing of counter-affidavits and another two weeks for rejoinders.

UP mills owe about Rs 733 crore to farmers against the cane bought at Rs 110 a quintal. The bulk of this is on account of co-operatives (Rs 337 crore) and State Government mills (Rs 241 crore), which have so far made only 59 per cent and 38 per cent of the payments due, respectively. On the other hand, private mills owe around Rs 155 crore, representing hardly two per cent of outstanding payments.

“We are happy that the apex court has made it clear to the State Government that it is bound to ensure that the dues of co-operative and State mills are also cleared within four weeks,” said Mr V.M. Singh, a farmer leader and Convenor of the Kisan Mazdoor Sangathan.

The Supreme Court’s latest interim order comes in the wake of two conflicting rulings of the Allahabad High Court and its Lucknow Bench.

The Lucknow Bench, on July 7, upheld the SAP of Rs 125 a quintal fixed by the UP Government. But on August 18, the Allahabad High Court passed a contrary order, quashing the SAP and allowing mills to pay the lower Rs 81.18 a quintal Statutory Minimum Price (SMP) set by the Union Government.

The High Court’s contention was that while the State Government had the right to fix the SAP, it has to be backed by reasons giving adequate outlines of norms, criteria or guidelines. The SAP cannot be decided unilaterally. The big question now is: will the UP Government announce an SAP for 2008-09, with the new season set to commence next month? According to one miller, the fact that the Supreme Court has not stayed the Allahabad High Court’s August 18 judgment would mean that no new price can be fixed till the former gives its final ruling on the issue.

More Stories on : Sugar | Courts/Legal Issues | Agricultural Policy

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