Even as the 2015-16 sugar season (October-September) has formally ended, mills in poll-bound Uttar Pradesh owe growers Rs 1,538.96 crore out of the Rs 18,003.21 crore worth of cane bought at the state advised price (SAP) of Rs 280 per quintal.
According to the UP Cane Commissioner’s Office at Lucknow, the biggest contributor to the total cane arrears of Rs 1,538.96 crore as on September 30 was the UK Modi Group. Its two mills have paid just Rs 43.28 crore or 10.28 per cent of the Rs 405.39 crore value of cane purchased by them, translating into Rs 362.11 crore of arrears.
Second on the list was Mawana Sugars (Rs 330.23 crore outstanding out of total payable amount of Rs 610.76 crore), followed by Simbhaoli Sugars (Rs 267.53 crore arrears against Rs 505.33 crore payable). India’s largest sugar miller, Bajaj Hindusthan Ltd’s dues were Rs 206.98 crore, but these formed only 7.27 per cent of the Rs 2,847.72 crore worth of cane purchased by its mills.
Others owing significant sums to growers included Rana Sugars (Rs 145.98 crore out of Rs 400.06 crore payable), Kesar Enterprises at Baheri (Rs 86.08 crore out of Rs 125.98 crore) and Upper Doab Sugar at Shamli (Rs 47.37 crore out of Rs 228.02 crore).
All other groups/firms, including the big ones like Balrampur Chini, Triveni Engineering, Dhampur Sugar Mills, KK Birla, DCM Shriram, Dwarikesh Sugar, Dalmia Bharat and Wave, have made full payments against their cane procured in 2015-16.
Meanwhile, the UP government is still to announce the cane SAP for the new 2016-17 season. The Cane Commissioner’s Office has just concluded the holding of meetings with farmers’ representatives and sugar millers for ‘reserving’ cane areas for individual factories. Such public meetings are a precursor to ‘reservation orders’ binding growers to supply cane to particular mills for whom the area is exclusively assigned. The SAP is also normally declared along with the issuing of reservation orders.
“We can expect both (SAP and reservation orders) in the next 10-15 days, unlike in the last season when it came as late as January 18”, sources told The Indian Express. There are two reasons why an earlier SAP announcement is likely this time. The first is political, having to do with Assembly elections scheduled by January.
The second is economic. Sugar is retailing in Delhi now at Rs 43 per kg, against Rs 30 a year ago. Ex-factory prices in UP, too, are ruling at over Rs 35 per kg, with global prices even higher: White sugar if imported will cost well above Rs 40/kg. The prospect of improving sugar realisations itself may prompt mills to make aggressive cane purchases.
Moreover, it isn’t sugar alone. Gur is currently retailing even higher at Rs 52 per kg in Delhi. The demand for the alternative sweetener could go up further in an election year. “Gur is basically concentrated molasses, which allows for its use in making illicit country liquor”, the sources pointed out.
The threat of diversion of cane to gur-making kolhus could be an additional compelling factor for mills to pay higher prices to farmers, irrespective of the UP government’s SAP. “Farmers need to plant wheat in the rabi season by early December. If the mills don’t show urgency in cane purchase, growers will simply sell to the kolhus,” the sources added.