UP sugar mills owe about Rs 8,000 crore to cane farmers

The sugarcane farmers of Uttar Pradesh (UP) have had a double whammy this year. On the one hand, the farmers have lost about Rs 3,000 crore due to a fall in cane production. On the other, the sugar mills still owe the cane farmers a payment of about Rs 8,000 crore. What is significant is that the sugar mills are legally obliged to pay the farmers within 14 days of cane supply, failing which there is the provision of interest payment. Notwithstanding the legal provision, the farmers are still waiting even for the interest payments.

According to the data from the Sugar Industry and Cane Development Department of the Uttar Pradesh (UP) Government available up to July 26, 2021, the sugar mills of the state have crushed a total of 10.275 crore tonnes of sugarcane in the current crushing season (2020-21). For this, cane farmers have so far been paid Rs 25,056.03 crore, which is 75.87 per cent of the total payments due. That is, 24.13 per cent of the prices are yet to be paid. If we calculate the payments for the entire year, the cane price payments for the current season come to Rs 33,024.95 crore. Based on this calculation, as of July 26, sugar mills are in arrears of Rs 7,968.62 crore to the farmers.

Besides, the government has said nothing about the interest liabilities on account of the delay in payments by the sugar mills. Interest payments of about Rs 2,500 crore are due from the period of the last government. As for the current Yogi Adityanath-led BJP government, it is almost silent on the interest figures. Farmer organizations claim that if the amount of interest is added, the farmers’ dues will exceed Rs 12,000 crore.

The question now arises why the cane farmers are not being paid in time in spite of the fact that the central government is offering incentives like those for ethanol production, setting up distilleries for this purpose and increase in ethanol prices besides export incentives. Not only this, but the government has also kept mum on the interest provision in the case of payments not being made within the 14-day period.     

Although the state government has constantly been claiming that record cane price payments have been made during its tenure, it cannot be gainsaid that the delay in cane price payments is a major political issue in the state. Before it came to power, the BJP had promised that cane price payments would be made within 14 days of the supply. But the payments for the last season were made several months after the current crushing season started. And the situation has been thus one season after another. The Opposition will certainly make an attempt to besiege the Government on this issue in the forthcoming elections. The farmer organizations, too, are constantly making an issue of the delay in payments and of the fact that there has been no increase in the State Advisory Price (SAP) of sugarcane over the last three seasons.

The decrease in the crushing of sugarcane this year is also being treated as a loss to the farmers. Jitendra Singh Hudda, a farmer from the district of Shamli, said to RuralVoice, “A weak crop has led to a decrease in crushing this year, which has directly impacted the farmers’ earnings. During the last crushing season (2019-20), the sugar mills of the state had crushed 11.18 crore tonnes of cane worth Rs 35,898.85 crore. These are official figures of the state government. Which proves that the farmers’ earnings have gone down by about Rs 3,000 crore in the current season.”

Besides, it is a bitter truth that despite the massive increase in the production cost of sugarcane, the state government has brought about no increase in its SAP over three crushing seasons, including the current one. In its first year, the present government had increased the SAP by Rs 10 per quintal in the crushing season 2017-18. Thereafter, the crushing seasons 2018-19, 2019-20 and 2020-21 witnessed no increase in SAP; it has remained frozen. Moreover, the current dispensation also holds an unenviable record of the maximum delay in the declaration of SAP. Although the crushing season runs from October to September in technical terms, most of the UP sugar mills start the crushing in November. But the government declared the SAP of sugarcane on 14 Februray, 2021 for the current crushing season. The crushing season was by then in its middle even in practical terms as almost all sugar mills in the state finish the crushing by May. Any sugar mill running after that is at best an exception.

Speaking to RuralVoice on the issue of cane payment arrears, the Bharatiya Kisan Union (BKU) spokesman Rakesh Tikait said, “BJP had come to power in the state with the promise of ensuring payments to the farmers within 14 days of cane supply. Prime Minister Narendra Modi had made this promise at three rallies, including the one at Meerut. But there has been no change in the status quo. The sugar mill groups that delayed cane price payments earlier are still doing so; rather, many more sugar mills have joined the ranks. This proves that the state government stands with the sugar mills rather than with the farmers.”

Tikait said that despite the orders from the High Court that the sugar mills were bound to pay interest to the cane farmers if payments got delayed, the government was not implementing the provision either. “The sugar mills are in arrears of about five thousand crore rupees of interest payments to the farmers. This situation is a pointer to the fact that the UP Government stands with the sugar mills rather than with the farmers.” He added, “BKU is holding a grand panchayat at Muzaffarnagar on September 5. After that these panchayats will be held at the district level. Which will be organized to protest the anti-farmer policies of the government.”

There are about two months to go before the new season starts and the sugar mills are in arrears of about Rs 8,000 crore. That too when the common man has been quite weakened financially in the Covid-19 epidemic. In UP, a large number of cane farmers fall in the category of marginal and small farmers with landholdings of even less than a hectare. One may well understand their economic plight in case of a delay in payments.