NEW DELHI :
Even as farmers across India are hit by a crash in wholesale prices of fruits and vegetables due to an ongoing lockdown to contain the spread of coronavirus, pending payments to sugarcane growers has emerged as an additional pain point hurting rural incomes.
Sugar sales are down due to a crash in institutional demand from confectioners and manufacturers of wide variety of products like ice-cream, aerated drinks and chocolates. In addition, oil companies are procuring lower volumes of ethanol, a by-product of sugar, impacting cash flows of sugar mills.
In Uttar Pradesh, the largest grower of sugarcane in India, mills currently owe farmers around ₹14,000 crore. “We are producing more sugar this year since cane which is normally used by traditional industries such as jaggery and khandsari units are diverted to mills for crushing," said Deepak Guptara, secretary of the Uttar Pradesh Sugar Mills Association (UPSMA).
According to estimates from the Indian Sugar Mills Association (ISMA), mills in Uttar Pradesh produced 11.65 million tonnes of sugar till end April, marginally higher than the 11.28 million tonnes produced last year. The sugar season in India commences in October every year and continues till September next year.
However, overall production of sugar in the entire country is lower by 6.37 million tonnes compared to last year, due to lower output in other states like Maharashtra and Karnataka. Further, the trade lobby estimated that sugar sales in March and April were lower by a million tonnes due to the lockdown.
“It is expected that sugar demand will increase as soon as the lockdown is withdrawn, especially because of demand from the traders to refill the pipeline, which is almost dry, and also because of the consumption increase coming up due to summer demand for beverages, ice creams, juices etc.," ISMA said in a statement earlier this month.
Mills in Uttar Pradesh have pleaded the state government for a bailout package in the form of a cash subsidy to help the industry make payments to farmers. According to UPSMA, member mills have so far paid 55% of the cane dues to farmers.
“The sugar mill near our village started crushing cane from November last year and owes me over ₹12,00,000," said Jahar Singh, a farmer from Bulandshahr district of Uttar Pradesh, adding, he is unable to make full payment to labourers who harvested the crop.
The crisis in the sugar industry is not limited to Uttar Pradesh. On Thursday, President of the Nationalist Congress Party Sharad Pawar wrote to Prime Minister Narendra Modi urging immediate relief for cooperative sugar mills in Maharashtra hit by the lockdown.
Among relief measures sought by Pawar are raising the minimum sale price of sugar, allocating funds to clear pending export incentives and buffer stock expenses, loan restructuring and moratorium, and providing one time grants to mills.