Farmers yet to get Rs. 2,760 crore due to them from the sugar mills.

More than hundred farmers in Uttar Pradesh committed suicide because their crop got destroyed in hailstorm early this year, after which they had nothing to fall back upon. Another reason for their financial bankruptcy was the fact that the country’s top corporates owed them about Rs. 5,000 crore in June as sugarcane arrears of last year.

Several months have passed but the corporate-owned sugar mills are yet to pay Rs. 2,760 crore to the farmers of the State.

State of crisis

These private defaulters, which own 40 of the 103 sugarcane mills, have left the farmers, especially the small farmers who don’t have huge landholdings, in a state of crisis. Importantly, the Central government had announced in June Rs. 6,000-crore interest-free loan to the sugar mills in the country so that they could clear farmers’ sugarcane dues. Of the total soft loan, sugar mills in UP got about Rs. 1,200 crore.

According to an Uttar Pradesh Cane Development Department document accessed by The Hindu, the figures of arrears the industrialists owe the State’s farmers, are the highest in the country. But domain experts like Sudhir Panwar, a farmer activist and member UP Planning Commission, the farmers, sugarcane industry and the State government were paying the price for “faulty” policies of the Centre which alone has the authority to formulate policies.

The Central government, Mr. Panwar argued, should control and regulate the sugar market through re-imposition of monthly release mechanism of balanced demand and supply of sugar in the market. “More importantly, the Central government should impose tax on the sugar consumed by the beverages industry which currently buys for industrial purposes sugar which is cross-subsidised by the taxpayers’ money,” he added. Interestingly, a recommendation to this effect has been made by the Commission on Agriculture Cost and Prices in its report to the Centre. The commission made several other recommendations to overcome the crisis of the sugarcane industry and farmers.

Low sugarcane prices

The UP State Sugarmill Association officials, however, highlighted the “grave crisis” facing the sugarcane industry and argued that the mills were unable to pay more than Rs. 190 per quintal sugarcane due to the loss of Rs. 4500 crore in the last financial year alone.

“The market rate of sugar is continuously going down because of which we are unable to recover our money. And hence, the delay happens in clearing the dues,” said Deepak Guptara of the UP Sugar Mill Owners Association.

Top defaulter

According to the UP cane department documents which are with The Hindu, the top defaulter is Bajaj group which is yet to pay Rs. 515.52 crore to the farmers if the interest over the arrear is included. The Mawana group, which owns three mills in the State, has defaulted on the payment of Rs. 441.24 crore. This arrear is calculated when they have paid for the sugarcane at the rate of Rs. 132.96 per quintal. The actual defaulting arrear is much higher because the government fixed rate for sugarcane for 2014-15 was Rs. 240.

The Birla group, which owns five mills in the State, owes Rs. 211.68 crore to the farmers. The Modi group, with two sugar mills owes Rs. 385 crore when the sugarcane rate is calculated just Rs. 73.22 per quintal as opposed to Rs. 240 as Minimum Support Price fixed by the State. Simbhaoli group which owns three sugarmills in the state is yet to pay Rs. 290 crore going by the price rate of about Rs. 158/quintal sugarcane, the rate it paid to the farmers. The due amount includes the defaulting amount and interest over it. Several rulings of High courts in UP mandated that interest for the period of non payment should also be added in the arrears. There are 11 other companies in the list with smaller outstanding amounts.

Mr. Panwar argued that UP gave budgetary support of Rs. 2600 crores of which Rs. 2000 crore directly went to bank accounts of farmers. The state can not bring down the MSP because that is driven by the input cost invested by a farmer in growing sugarcane.

“Sugar which is available in the domestic market is cross subsidised by the Central as well as respective State governments. A series of steps which are crucial to sort out the crisis facing the farmers and the industry includes charging those player who make commercial use of the sugar,” he maintained.