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New Delhi: Sugar mills in Uttar Pradesh will have to sell their stocks by 31 October to pay the money they owe growers, after the Supreme Court refused to interfere with a 5 September Allahabad high court order to the effect.

The move will provide relief to farmers in the drought-affected state.

The Supreme Court was hearing pleas filed by Punjab National Bank and State Bank of India, which claimed that the mills owed them over 8,000 crore and they had the first right on sugar produced by them.

The high court’s order came in response to a public interest litigation filed by Rashtriya Kisan Mazdoor Sangathan (RKMS) highlighting the situation of cane growers.

A representative of mills operating in the state expressed his unhappiness at the situation in the state. Mills, he hinted, were the victims of the populist practices of the state government.

“As on 10 October, the dues of sugar mills to farmers in Uttar Pradesh are 2,856 crore. While the sugar industry is in stress, the government has not addressed the basic issue of linking cane prices to sugar prices," said Deepak Guptara, secretary of the UP Sugar Mills Association (UPSMA).

The situation is because of the high state-advised price of 280 per quintal and low realization from sugar sales due to which mills are running into losses, UPSMA says.

Uttar Pradesh is the largest grower of sugar cane in the country and the second largest producer of sugar after Maharashtra; about four million farmers grow sugar cane in the state.

“This is a historic day for farmers because since independence, the first right on sugar was with the banks. The Supreme Court has recognized that this right lies with the farmers. This will go a long way in solving the problems that cane farmers face," V.M. Singh of RKMS said.

“It will also streamline the lending pattern in the sugar industry since banks will now be hesitant to give loans to sugar mill owners and instead be more willing to give loans to farmers."

Guptara declined to comment on the court decisions and said sugar mills are holding on to their decision of not beginning crushing operations in November.

The two banks could not immediately be reached for comment.

On 5 August, 66 private sugar mills that crush 75% of the sugar cane produced in the state sent closure notices to the state government.

In the past few months, several heavily indebted farmers from prosperous sugar cane growing areas of western Uttar Pradesh—in Baghpat, Bijnor and Shahjahanpur districts—committed suicide.

On 10 September, food minister Ram Vilas Paswan expressed his disappointment at the fact that although the central government had extended soft loans, raised export subsidies and hiked import duties, mill owners had failed to pay the money they owed farmers.

Remya Nair in New Delhi and Anup Roy in Mumbai contributed to this story.

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