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News
UP sugar production may not fall but mills to carry forward Rs.1,200 cr arrears
Date:
16 Sep 2016
Source:
The Business Standard
Reporter:
Virendra Singh Rawat
News ID:
5977
Pdf:
Nlink:
Following good sowing of sugarcane in Uttar Pradesh (UP)
sugar
mills
this year may see slightly higher
sugar
production
compared to other states especially Maharashtra, which could see a huge fall and may lose status of top
sugar
producing state atleast in
sugar
season 2016-17. This will be significant because national
sugar
production
in
sugar
year 2016-17 begnning October is expected to be atleast 8% lower.
The
cane
and
sugar
production
in
UP
is expected to be at par last year, when the state had clocked
sugar
output of a little over 68.55 lakh tonnes (LT). Indian
Sugar
Mills
Association expect it to be even higher at 7.54 million tons.The reason for this is
UP
is facing an election year in 2017 and despite threats to many large companies not to allocate them any reserve area this season due to they defaulting in making
cane
payments to farmers in previous seasons.
Government will allocate reserve areas to ensure
cane
get crushed and farmer are happy. Even an initial talks have begun to increase state
cane
price by Rs 30-40 this season. Divergence to jaggery units has also came down significantly as
sugar
has turned remunerative for all concerned due to rising
sugar
prices.
However, with 2016-17 crushing season approaching fast, the
UP
sugar
sector is likely to carry forward arrears of almost Rs 1,200 crore to the next season.
The private
sugar
mills
are still beset with arrears of over Rs 1,600 crore pertaining to 2015-16 season, the bulk of which is due on units controlled by prominent groups viz. Modi, Mawana, Simbhaoli, Rana, Yadu etc. They collectively account for around 20
mills
of the total 117 functional
mills
in the state spanning the public and private sectors.
In fact, these have been identified as 'habitual offenders' in the state sugarcane space for routinely defaulting on farmers' payments.
UP
and Maharashtra are India's top two sugarcane and
sugar
producers and contribute 50% to the country's annual production.
"Of the outstanding arrears of over Rs 1,600 crore at present, the
mills
controlled by Modi, Mawana, Simbhaoli etc account for about Rs 1,400 crore," an industry source said on condition of anonymity.
With the crushing season less than three months away, the
sugar
industry was gearing
up
to begin operations in the month of November-December carrying backlog of about Rs 1,200 crore, he underlined.
Of the 117 mills, the cooperative sector comprises 24 mills, while
UP
State Sugarcane Corporation Limited (UPPSCL) controls a lone unit. This way, the private sector dominates the
UP
sugar
sector with 92 units.
Over the past months, the state government had registered police cases against the defaulting private
mills
and issued recovery certificates against their owners.
UP
Police had even raided their premises, although none could be arrested.
This being an election year, since
UP
is due to witness polls in early 2017, the state is bound to keep farmers in good humour.
UP
cane
price of Rs 280 per quintal has not been increased over the last couple years, while the state had also provided many incentives to
mills
to strike a balance between the interests of industry and
cane
farmers.
In this backdrop, although the state government had earlier warned the defaulting
mills
that they would not be allocated
cane
area for next season, they are likely to be allocated
cane
area for crushing to allow for maximum
cane
to be crushed by mills.
Over the last 4 years, the diversion of
cane
to gur (jaggery) and khandsari units has come down from about 40% to less than 30% due to remunerative prices being paid by mills. Sometimes,
cane
farmers sell their harvest to such units for ready cash.
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