Sugarcane arrears mount to ₹19,243 crore

Payments owed to sugarcane farmers by mill owners touched a whopping ₹19,243.63 crore as of Tuesday for the 2014-15 season (October-September), with the Food Ministry set to convene a meeting with Chief Ministers of States on April 16, to examine solutions to help growers as well as mill owners.

Uttar Pradesh, the country’s second largest sugar producing State, accounts for more than half of the total dues, with mills owing almost ₹9,716 crore to farmers.

Mills in Maharashtra, the biggest sugar producer, have outstanding payments of ₹2,864 crore, while arrears in Karnataka stand at ₹2,402 crore.

“The state of cane farmers in the country is terrible with increasing dues. We have stated earlier that the Centre has a limited role to play, with State governments choosing to fix their procurement prices at a higher rate than the Fair and Remunerative Price (FRP) set by us,” said Food Minister Ram Vilas Paswan on Wednesday.

Millers in UP, who pay a State Advised Price (SAP) of ₹280/quintal of cane against the FRP of ₹220/quintal, have long demanded that the State adopt the Rangarajan Committee formula for a rationalised pricing policy. The ‘formula’ has been adopted by Maharashtra and Karnataka.

The committee had recommended that mills pay the farmers the FRP upon receiving the cane and subsequently pay 70 per cent of the proceeds from the sale of sugar and other by-products.

In an arena of depressed sugar prices, currently around ₹2,550-2,600/quintal (ex-mill), the industry claims that losses have been mounting, leading to worsening of the arrears situation.

“We are meeting cane farmers on April 15 to discuss the issue, while the following day we will have a meeting with the Chief Ministers of UP, Punjab, Haryana, Maharashtra, Bihar, Karnataka, Gujarat, Tamil Nadu, among others. We will try to evolve solutions to settle this problem,” said Paswan.

While the industry has demanded export incentives for white sugar along the lines of that provided for raw sugar, as well as the creation of a buffer stock, Paswan said it was too early to state that any of those demands could be met, but did not rule these out.

“The last time such a meeting took place, we worked out solutions to help those involved by providing soft loans, export incentive on raw sugar, raising import duty, etc. Now these demands will be discussed at the meeting the Ministry is calling, I can’t say much now,” he said.

Sugar output is estimated at 265 lakh tonnes (lt) for the current season, with domestic consumption pegged at 244 lt. The industry began the season with a carryover stock of 75 lt.

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