According to farmers a balance of Rs 1,200 remained to be paid as cane prices from the previous year.
The director-general of Indian Sugar Mills Association (ISMA) SL Jain also confirmed that arrears payable to cane growers by alone by private sugar mill amounted to Rs 1,100 crore. The balance amount is the arrears payable by public sector and cooperative mills in the state.
The cane growers are unhappy with the recent verdict of the Lucknow bench of the High Court which called for a reduction in the state adviced price (SAP) in the current year from Rs 1,250 a tonne to 1100 a tonne.
Farmers agitation subsequently led to the arrest of the Bharatiya Kisan Union leader, Mahendra Singh Tikait on November 12.
Farmers from all over the country including the president of Bharatiya Krishak Samaj, Krishan Bir Chaudhary have written to the state chief minister, Mayawati and the prime minister, Manmohan Singh demanding the release of Tikiat and respecting the demands of Uttar Pradesh farmers.
According to state farmers input costs have gone up by over Rs 150 a tonne and a reduction in SAP would severely affect their income.
In UP as the farmers do not get much benefit from thhe government sponsored procurement of wheat and paddy, they find cane cultivation as an assured source of income.
When asked about the industrys view the ISMA director general, SL Jain said : While the government is subsidises procurement of wheat and paddy, the industry subsidises cane growers. This is utterly unfortunate.
Jain alleged that the SAPs were fixed by the state not on basis of economics, but for political considerations.
We find difficult to pay such high SAPs and that is why the arrears accumulate. Mills get loans from banks against 85% of the valuation of the stock.
The valuation is done on basis of the current market price or the average price of the last 3 months, whichever is lower. Mills pay farmers after getting loans, which is not adequate to cover all costs. Jain said that while sugar recovery was about Rs 1010 per tonne of cane, it was not sufficient to meet the costs and pay a high SAP.