Agri Business

UP sugar mills’ dues to farmers rise to ₹8,447 cr in FY20 on lockdown effect, subsidy delay

TV Jayan New Delhi | Updated on October 04, 2020 Published on October 04, 2020

UP’s sugar mills, still recovering from the lockdown impact and owed subsidy payments from the government, are yet to pay ₹8,447 crore to farmers for the previous sugar season ended September 30. This is nearly 80 per cent more than the ₹4,942- crore owed in the 2018-19 season.

According to a report released by the Uttar Pradesh Department of Cane Development and Sugar Industry, the mills had, till the end of the season, paid just over 76 per cent of the ₹35,898 crore due towards cane supplied by farmers.

Nearly a third of the dues are from Bajaj Hindustan Sugar Ltd, which owns 14 mills in the State. Of the total ₹5,339 crore cane payment due for the 2019-20 season, the firm has paid ₹2,701 crore so far, according to the data released by the Department.

Another major defaulter is Modi Sugar Mills, which has made only 37.44 per cent of the cane payment.

“Most defaulting mills are those from western Uttar Pradesh. Within this region, the mills that fall in the Shamil area — represented by Suresh Rana, the Minister for Cane Development and Sugar Industry in the Assembly — have some of the maximum outstandings,” said Jitender Singh Hudda, a medium farmer, who closely tracks the sugar sector in the country.

While private factories owe farmers ₹7,702 crore, nearly ₹610 crore is due from mills in the cooperative sector and ₹130 crore from government-owned units.

According to a source in the UP Sugar Mills Association, the industry is yet to recover from the impact of the lockdown. “Even though sugar consumption at the household level is good, institutional buyers — makers of beverages and confectionery, hotels and restaurants — are still not buying. Of course, there is some improvement of late,” the source said.

Pending subsidies

Also, the mills have not been fully paid for the subsidies or for the power supplied. “While the pending subsidies are about ₹2,000 crore, the mills are yet to get payment of nearly ₹1,000 crore for the co-generation power,” the source said.

All this has impacted the liquidity position of sugar mills in the State, he said, adding that there could be a substantial reduction in the cane arrears if the mills receive these monies.

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Published on October 04, 2020
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