Sugar mills may owe farmers ₹12,000 cr for cane by end of September

Sugar mills across the country are set to end the 2013-14 crushing season (October-September) with cane arrears of over ₹12,000 crore.

Mills in Uttar Pradesh may end the crushing season with close to ₹7,800 crore arrears, followed by their counterparts in Karnataka with around ₹3,600 crore.    

The delay in payments has irked cane growers in Karnatakawho have demanded that the State Government confiscate sugar stocks and sell them to clear their dues.

“Payments due for the current season are about ₹3,400 crore. Including last year, the total arrears stand at around ₹3,600 crore. We also want the mills to pay interest of 15 per cent on outstanding payments for over 14 days,” a farmer leader said.

With the decline in sugar prices over the last fortnight, the chances of cane price arrears getting cleared early seems remote, industry sources said.

The build-up in cane arrears is attributed to the high cost of production, driven by higher cane price and lower-than-expected realisations. Though sugar prices rebounded from a five-year low in February this year, millers said it may take a while to recover.

Meanwhile, the Indian Sugar Mills Association said the output of the sweetener till April-end was down 3.45 per cent at 23.75 million tonnes, against the corresponding last year’s 24.6 million tonnes. About 80 factories were still crushing cane as of April-end, with the 2013-14 season almost coming to an end.

In Maharashtra, the largest sugar producing State, output was down 2 per cent at 7.65 million tonnes, against 7.81 mt last year. About 15 factories were still crushing cane, mainly in the Kolhapur and Pune region. Sugar recovery averaged at 11.4 per cent during the current season.

Similarly, in Uttar Pradesh, production was 14 per cent lower at 6.41 mt against 7.48 mt last year. About 10 factories were still in operation as on April-end, while the average recovery was marginally higher at 9.27 per cent against last year’s 9.18 per cent.

However, in Karnataka, sugar output was about 23 per cent higher at 4.17 mt against last year’s 3.4 mt, aided by an increase in recovery at 10.99 per cent.

ISMA said the delay in notifying the sugar exports incentive is also keeping millers in Maharashtra, Karnataka and Tamil Nadu in uncertainty. Millers in these States hold stocks of about six lakh tonne of raw sugar as of March-end.

COMMENT NOW