The Uttar Pradesh government has directed the sugar mills to clear arrears of cane farmers for the 2018-19 season by the end of August.
The government move comes as the next cane crushing season is set to commence in the next two months.
The sugar mills owe over Rs 8,200 crore to the cane growers of which 95 per cent share is that of private sector sugar mills.
Against a total cane payables of Rs 33,047 crore, sugar mills have so far paid 75 per cent or Rs 24,792 crore to farmers, thus leaving 25 per cent or Rs 8,255 crore in arrears for 2018-19 season. During the corresponding period last year (2017-18), the unpaid component stood at Rs 11,161 crore or about 32 per cent of the total amount.
The Union and state governments had announced separate soft loan schemes for helping private sugar mills pay farmers in the backdrop of sugar market glut, export market squeeze and falling sugar prices.
After holding a meeting with representatives of private sugar mills, the Cane department issued stern directives for ensuring all payments by August 31.
The sugar mills were also instructed to complete annual repairing and maintenance at the earliest so that mills could start operations for the upcoming crushing season (October 2019-April 2020) on time.
Private mills account for nearly 95 per cent of total arrears in the state at Rs 7,800 crore, followed by UP Co-operative Sugar Factories Federation mills at Rs 430 crore. Among top payment defaulters are Bajaj Hindustan group mills (more than Rs 2,800 crore ), Simbhaoli mill (Rs 600 crore), Modi mill (465 crore) and Dhampur mill (Rs 354 crore).
Last month, the government had warned the defaulting mills that cases under Section 3/7 of Essential Commodities Act (ESA), 1955 would be filed against them and recovery certificates authorising district administration to seize plant and stock for auctioning would also be issued.
In fact, Chief Minister Yogi Adityanath had asked sugar mills to settle their arrears, stressing that any delay in clearing arrears would not be tolerated.
“Cane arrears payment is incumbent on liquidation of stock and is the responsibility of the government to facilitate sale. We have been given limited quota for selling sugar and we face the double whammy of maintaining inventory and not being able to sell as well,” an official of a leading sugar company said.
In 2018-19 crushing season, 119 sugar mills, including 94 private, 24 Cooperative and one of UP State Sugar Corporation, participated in crushing operations. The state sugar output stood at about 11.8 MT compared to over 12 MT in 2017-18.