UP sugar mills still owe Rs 740 crore to farmers

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New Delhi, Jul 2: Even as the supreme court declined to extend the deadline for UP sugar mills to clear their sugarcane arrears for the current marketing year that ends September, both private and state-run mills in the state still owe about Rs 739.05 crore as sugarcane dues to farmers.

According to a senior industry official representing private millers, state private sugar mills numbering a maximum of around 90, owe just about Rs 158.47 crore out of the total dues payable of Rs 6,993 crore at the start of the marketing year till date. State-run sugar corporations and co-operatives owe about Rs 580.58 crore, out of the total dues of Rs 637.88 crore.

The supreme court had earlier this week declined to extend the deadline for payment of sugarcane dues to farmers by mills. The mills had sought an extension of eight weeks from the original deadline of June 30.

“Private mills in UP have been more prompt in clearing the sugarcane dues to farmers this year and now owe just about 2.15% of the total sugarcane dues, while state-run corporation and co-operatives owe much more than that,” the official, who declined to be identified, said.

State-run co-operatives and corporations run around 50 sugar factories in UP. The sugarcane dues have been calculated at a price of Rs 110 per quintal, ie the interim price fixed by the supreme court.

Mills in UP have failed to clear their sugarcane arrears to farmers in time because of two successive years of bumper production and low retail prices. India’s sugar production in 2007-08 is expected to reach an all-time high of 26 to 27 million tonne, much higher than the usual local consumption of around 21 to 22 million tonne.

As a result of fall in exports due to global supply glut, mills in India were saddled with huge inventories and sharp drop in prices, prompting the government to direct mills to create a buffer stock of 50 lakh tonne for one year to absorb excess supplies.

“The situation has not improved yet, as cost of production of sugar is around Rs 1,650 to Rs 1,670 per tonne, while the sale price is around Rs 1,400 per tonne, pushing millers in UP further into distress,” the industry official added.

Private sugar mills in the state called for immediate stopping of coercive measures by the state government to clear sugarcane dues.