UP’s tale of sugar dues continues despite promises
`3,175 crore outstanding in spite of record output
Sugar mills in Uttar Pradesh continue to hold payment of farmers. A huge amount of Rs 3,175 crore is due to farmers even as the state produced a record quantity of the sweetener this season with the best price realisation in the last four years that increased profit of many companies.
According to official data, the outstanding on cane payment of Bajaj Hindusthan, the country’s largest producer, was Rs 1,709 crore this season as on June 15. Simbhaoli Sugars is yet to clear Rs 217 crore, Mawana Sugars Rs 146 crore, Modi Mill Rs 421 crore and Rana Sugars Rs 49 crore. These figures are based on the state advised price of sugarcane.
In the last four months, the outstanding of Modi Mill towards farmers has increased to Rs 421 crore from Rs 295 crore in February. While Bajaj Bajaj Hindusthan, the country’s largest producer has cleared about Rs 410 crore in the past four months, Simbhaoli Sugars has paid about Rs 180 crore and Mawana Sugars has cleared Rs 200 crore.
The ex-mill sugar realisation in UP has been Rs 36 per kg this year so far, up from Rs 26.58 per kg last year whereas retail price is about Rs 44 a kg in the state. In 2012-13, the average ex-mill price was between Rs 28.10 a kg and Rs 36.85 a kg in UP as against retail rates of about Rs 41a kg.
BJP had made cane arrears a poll issue, promising farmers to ensure payment in 14 days. However, the state government is yet to ensure that mills clear the dues.
The problem in Uttar Pradesh is limited to a few mills while others have cleared their dues, said an industry executive. Further, the cane dues in UP are higher than what mills are to pay in Maharashtra as in the western state the cooperative mills buy cane at Centre’s fair and remunerative price of Rs 230 a quintal.
After the hike in the state advised price (SAP) of sugarcane by UP government to Rs 305 a quintal for 2016-17 (October-September) from Rs 280 a quintal in the previous season, the cost of production of sugar has increased by about Rs 4 a kg to nearly Rs 34 a kg.
While mills claim the raw material (sugarcane) cost is about 70 per cent share in the cost of production, farmers leaders dispute the calculation saying the earnings from by-products like ethanol, molasses, spirit and power should also be added.
Bajaj Hindusthan Sugar has reported a net profit of Rs 259.13 crore for the quarter ended March 31, 2017 as against a loss of Rs 36.63 crore for the quarter ended December 31, 2016.
Similarly, Rana Sugars made a turnaround by reporting a profit of Rs 55.35 crore in the quarter ended March from net loss of Rs 62.10 crore in the October-December quarter.
Simbhaoli Sugars’ net loss has declined to Rs 2.47 crore in January-March 2017 quarter from Rs 19.41 crore in the previous quarter. Mawana Sugars’ net profit saw a fall to Rs 92.63 crore in fourth quarter from Rs 363.02 crore in 3Q of 2016-17FY.
The cooperative sugar mills-dominated Maharashtra has Rs 19 crore cane arrears in 2016-17 season (October-September), even though they are yet to clear Rs 211 crore from previous two seasons. Mills in Karnataka have cane dues to the tune of Rs 17 crore this year since October 1, official data show.
In prime minister Narendra Modi’s home state Gujarat, farmers are waiting for Rs 1,106 crore, the second highest arrear after UP, payment from mills. Others states where the arrears are at a high level include Tamil Nadu (Rs 537 crore), Uttarakhand (Rs 352 crore) and Punjab (Rs 164 crore). In Gujarat, mills normally hold up certain percentage of the dues and clear it after the closure in March-April.
India’s sugar production in 2016-17 has reached 20.07 million tonnes (mt) as of June 15, down from 25.1 mt in the previous season. Uttar Pradesh has produced record 8.75 mt this year which is attributed partly to higher cane yield as well as diversion from gur units to sugar mills after demonetisation crippled cash supplies during the peak of the season.
Prabhudatta Mishra