Sugar mills in Uttar Pradesh on Friday gave an assurance that they will utilise incentives offered by the Centre, including interest-free loans, to clear dues to farmers that stands at nearly Rs 7,000 crore now.

Earlier this week, the government had decided to give an additional up to Rs 4,400 crore interest-free loans to sugar mills, hike import duty to 40 per cent from 15 per cent and extend export subsidy till September this year.

However, Food Minister Ram Vilas Paswan had said that these decisions would not be implemented till the industry gave an undertaking that they would pay cane arrears.

“A letter has been given to the Food Secretary regarding the cane payment arrears of sugar mills,” Uttar Pradesh Sugar Mills Association (UPSMA) President C B Patodia told PTI.

UP millers owe nearly Rs 7,000 crore to sugarcane farmers, out of the total cane arrears of Rs 13,000 crore in the country.

Patodia noted that the UP millers have cleared Rs 2,600 crore arrears to farmers pertaining to 2012-13 marketing year with the help of interest-free loans provided by the UPA government and internal accruals. Sugar marketing year runs from October to September.

“This season, as on June 21st, private sugar mills in UP have cane arrears Rs 6,700 crore. Out of this, we will be able to clear Rs 1,300-1,500 crore from sale of sugar in next three months,” he said.

Moreover, Patodia said the UP millers are expected to get about Rs 900 crore interest free loans out of Rs 4,400 crore loans offered by the Centre recently. “This Rs 900 crore will be fully utilised for cane payment,” he added.

UP sugar mills is also expecting Rs 9 per kg subsidy from the state government amounting to Rs 550 crore as promised at the beginning of the crushing season in October 2013, he said, adding that same would also be utilised for the cane payment.

“If there is an increase of Rs 1 per kg in the sugar price, mills will get an additional Rs 50 crore per month. This would also be used for making payments to farmers,” Patodia said.

Stating that cane arrears in UP would still stand at about Rs 3,000-3,500 crore at the end of 2013-14 marketing year in September, he said: “The balance arrears will be cleared from the sale of sugar produced in 2014-15 marketing year.”

Patodia stressed that linkage of cane and sugar prices is key for the survival of the UP mills. Sugar production in India, the world’s second largest producer and biggest consumer, is expected at 24.2 million tonnes as against the annual domestic demand of 23 million tonnes. The closing stock of sugar at the end of the season is seen at 7.5 million tonnes.

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