NEW DELHI – Sugar mills in Uttar Pradesh have asked the state government to allow payment to cane farmers in two tranches, an industry source said.
Mills struggle to make timely payments to farmers due to high cost of sugar production and depressed prices. As of mid-October, sugar mills in the state owed 45 bln rupees in cane dues to farmers.
"First trance equivalent to FRP (fair and remunerative price) base rate… (second) the difference between FRP and SAP (state advised price) be payable before the end of the sugar year," one of the officials said.
Sugar mills in the state are struggling to pay cane dues to farmers as they face direct losses of around 10 bln rupees due to the "unilaterally and unreasonably" downward revision of prices from co-generation of power from bagasse, the official said.
Uttar Pradesh Power Corp Ltd has halved the price of power produced by state sugar mills to 1,010 rupees per tn. Currently, the price of bagasse is around 2,400 rupees per tn.
Mills have also urged that payment of rejected varieties of sugarcane be made at the base price of the fair and remunerative price fixed by the central government due to the liquidity crunch of mills.
Cash flow of sugar mills in 2019-20 (Oct-Sep) is down by 30 rupees per 100 kg of sugarcane.
Mills have also asked the state government to provide refund on transportation of sugarcane at 12 rupees per 100 kg due to an increase in costs from the centre to factories. Millers also want that the Society Commission paid on purchase of cane be fixed at 2 rupees per 100 kg.
Following the rise in reservation of molasses for country liqour by the government, millers have asked the government to fix the reservation at 66% of the quantity lifted during 2017-18.
"As a viable alternative, the balance can be sourced from grain-based distilleries," the official said.
Uttar Pradesh has hiked the levy quota for molasses twice in the last two months, which has led to losses for mills as they are forced to sell molasses to distilleries at a discounted price.
Uttar Pradesh is the largest producer of sugar and molasses in the country.