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File photo. According to ISMA, sugar production during the 2017-18 crushing season is likely at 26.1 million tonnes, about 29% more than 20.3 million tonnes a year ago. Photo: Priyanka Parashar/Mint
File photo. According to ISMA, sugar production during the 2017-18 crushing season is likely at 26.1 million tonnes, about 29% more than 20.3 million tonnes a year ago. Photo: Priyanka Parashar/Mint

Dues to sugarcane farmers soar to Rs14,000 crore

Payment to cane growers is considered 'due' when it is delayed by more than 14 days after supplying raw cane to a mill

New Delhi: Following higher sugar production and plummeting wholesale prices, dues to sugarcane farmers from mills are piling up, shows latest numbers. According to the Indian Sugar Mills Association (ISMA), till January end, sugar mills across various states owed farmers Rs13,932 crore.

Payment to cane growers is considered ‘due’ when it is delayed by more than 14 days after supplying raw cane to a mill. ISMA’s data showed that mills in Uttar Pradesh owed farmers the most at Rs5,553 crore, followed by Karnataka (Rs2,714 crore) and Maharashtra (Rs2,636 crore).

The payment crisis can worsen farm distress in a year when farmer incomes have been stressed due to fluctuating prices of horticulture crops, and market prices of pulses and oilseeds remain below the government’s support prices.

According to ISMA, sugar production during the 2017-18 crushing season (October 2017 to September 2018) is likely at 26.1 million tonnes, about 29% more than 20.3 million tonnes a year ago.

However, domestic sugar production could touch 27 million tonnes in the current year (2017-2018), implying a staggering 33% increase year on year, ratings agency ICRA said last week. According to ICRA, domestic production is likely to exceed consumption by around 2 million tonnes in the current crushing season.

“(An) upward revision in the sugar production estimate along with the liquidation of sugar stocks especially by several cash-strapped sugar mills with limited access to working capital in order to meet cane payments has resulted in a decline in the sugar prices during December 2017 and February 2018," ICRA said in a statement.

It added that recent steps by the government helped in lifting wholesale sugar prices from a low of Rs31.5 per kg in early February to current levels of around Rs35 per kg. The steps include imposing a 100% duty on imports of raw and white sugar, and imposition of limits on sugar sales by mills.

However, ICRA also said that it does not rule out renewed pressure on sugar prices if final production turns out to be higher than the current estimates of around 27 million tonnes.

“Following up on my petition (in 2016) the (Allahabad) High Court had ordered mills to pay penal interest to farmers for delays in payment," said V.M. Singh, convener of the All India Kisan Sangharsh Coordination Committee, an umbrella body of over 180 farmer organizations.

“Bowing to pressure from mills, the previous Akhilesh Yadav government (in Uttar Pradesh) waived interest payments. The new government under Yogi Adityanath was asked by the court to take a decision within four months but it is yet to take a call," Singh said.

He added that imposing a penal interest of 15% per year on the dues will ensure that sugar mills do not hold payments to farmers. “Even in the past, during low-production years, mills delayed payments and a surplus year is now used as an excuse," he said.

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