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UP’s sugar output dips 7% on-year, cane dues mount to Rs 8,400 crore

The dip in production is primarily due to diversion into ethanol production while rising disease and pest infestation also impacted the output

Uttar Pradesh, Sugar, sugar mills, sugar output
The three UP sugar corporation mills have paid 48% of their dues and still owe Rs 222 crore.

Sugar production in Uttar Pradesh, the country’s second-largest producer of the sweetener after Maharashtra, has fallen around 7.3% year-on-year to 10.24 million tonne (MT) in the 2021-22 season.

The dip in production is primarily due to diversion into ethanol production while rising disease and pest infestation also impacted the output. The sugar recovery, too, has been falling gradually. While in 2018-19, the recovery was at a record 11.46%, it decreased to 11.30% in 2019-20, while in 2020-21, the recovery was at 10.76%. This year, it has struggled to reach 10.10%, mainly due to the weather turning warmer-than-expected.

Meanwhile, the sugar crushing season in the state has come to an end for the 2021-22 season, with mills clearing just about 76% of their cane dues to the farmers.

According to data accessed by FE, as on June 3, the 120 mills that operated in this season have paid Rs 26,630 crore cane dues, while Rs 8,378 crore are still pending. The 93 private sugar mills operating in the state have cleared 78% of their dues and still owe approximately Rs 6,995 crore, while the 24 UP Cooperative sugar mills have paid 60% and have a pendency of Rs 1,161 crore. The three UP sugar corporation mills have paid 48% of their dues and still owe Rs 222 crore.

Among the private millers, four sugar companies — Bajaj Hindustan, Modi Sugars, Simbhaoli Group and Yadu Group — together owed more than 50% of the state’s total dues. Bajaj Hindustan, which operates 14 factories in the state, is the topmost defaulter, owing Rs 3,200 crore, while Modi Group’s two factories owed Rs 686 crore. Simbhaoli Group had Rs 583 crore pending while the Yadu Group had an outstanding of Rs 126 crore.

Many among the private sugar mills have cleared all their cane dues. Groups like Balrampur Chini, DCM Shriram, Dalmia, Dhampur, Dwarikesh and Triveni, have cleared 100% of their dues, while Birla Group and IPL have cleared nearly 96% of their dues. Some others like Uttam Sugars, Wave Group and Mawana have cleared more than 80% of their cane payments. Not only the bigger groups, even some individual mills like Parsendi and Biswan, Tikaula and Pilibhit have cleared their entire cane dues.

Talking on the backlog in clearing the dues by some private millers, a miller requesting anonymity said this has become a recurring problem with these groups, who carry over the cane payments to the next season. “Every year, a handful of defaulter mills bring down all the good work done by the progressive mills. And what is worrisome for the sector is the fact that the mismanagement of the few defaulters is always overlooked by the state government. No action is taken against them, which acts as a dampener for those who work hard to keep their books clean,” said a mill owner requesting anonymity.

Interestingly, the 24 cooperative mills in the state have paid only 60% of their dues. While the total cane dues of these 24 mills stand at Rs 2,962 crore, they have arrears of Rs 1,161 crore, while the three mills of UP Sugar Corporation have cleared only 48% of their dues and still have Rs 222 crore pending. According to sources, most of the cooperative mills are old and loss-making and incur losses every year, forcing the state government to step in to clear the farmers’ cane dues and also pay for their maintenance.

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