INDIA: UP cane arrears seen at US$465.8 million by end-June

Published: 06/19/2017, 11:42:51 AM

Even as the Yogi Adityanath government in Uttar Pradesh is on course to its first 100 days in office by June end, the sugarcane arrears stand tall at INR30 billion (US$465.8 million), according to India's Business Standard newspaper.

The settlement of cane dues within 14 days of supply at sugar mill gates was one of the flagship pre-poll promises of the ruling Bharatiya Janata Party (BJP) in the state.

Soon after coming to power, Yogi had issued a stern warning to private sugar millers to ensure payment of dues within the stipulated time lest strict penal action was taken.

However, the arrears have still not touched the level of 90% in the current crushing season. Against total payables of a little over INR253.86 billion, the mills had collectively paid INR224.02 billion as per the latest available data. This leaves INR29.84 billion as pending on mills, wherein private units owe the substantial amount of INR25.74 billion for the current season.

Besides, the private mills owe INR400 million and INR620 million in arrears for the 2014/15 and 2015/16 crushing seasons respectively, which totals INR1.02 billion. Additionally, the mills are supposed to pay interest at the rate of 15% on arrears if they are unable to pay farmers within 14 days.

Last month, the cane department had slapped INR2.27 billion on mills in interest penalty over their failure to settle farmers' payments within time. Now, this amount is likely to balloon further over the still remaining arrear portion.

On April 20, a delegation of UP Sugar Mills Association (UPSMA) comprising sugar mills owners had met Yogi and submitted a memorandum demanding a viable cane pricing and revenue sharing formula to insulate the sector from pricing and cyclical fluctuations.

The industry also put forth its long pending demand of de-reservation of molasses, a sugar byproduct, so that the mills' profitability could increase and help speedier settlement of arrears.

Meanwhile, UP had topped domestic sugar production by clocking record output at 8.75 million tonnes compared to 6.82 million tonnes last year, thus clocking 40% higher production.

Last year, the total payables to UP cane farmers had stood at about INR180 billion, which has increased to over INR250 billion, a jump of nearly 40 percent, although the cane price was also higher this season. The state cane price effective for the current season was hiked by INR25 from INR280/quintal to INR305/quintal for normal variety. The previous cane price hike was announced in 2012/13 from INR240 per quintal to INR280 per quintal.

There are 116 sugar mills in UP, of which the bulk of 91 belong to the private sector, followed by cooperative sector at 24, while UP State Sugar Corporation Limited (UPSSCL) accounts for a single operational mill.