Leading sugar mills in Uttar Pradesh such as Bajaj Hindusthan and Mawana Sugars owe the farmers as high as Rs 5,540 crore this season even as profit levels in the industry has been the highest in the last four years. “There is no reason why some mills should hold back the money of the farmers when they are earning very good profit this year,” said Sudhir Panwar, a Samajwadi Party leader and planning commission member in Uttar Pradesh.
According to official data, the outstanding on cane payment of Bajaj Hindusthan, the country’s largest producer, was Rs 2,121 crore this season as of February 1. Outstanding dues on the other biggies include Simbhaoli Sugars’ Rs 398 crore, Mawana Sugars Rs 343 crore and Modi Mill Rs 295 crore.
Interestingly, the ex-mill sugar realisations in UP have improved to Rs 37 per kg, from Rs 26.58 per kg last year.
The average ex-mill price was about Rs 35.50 a kg in the October-December quarter. In 2012-13, the average ex-mill price was pegged between Rs 28.10 a kg and Rs 36.85 a kg as against retail rates of about Rs 41 per kg. After the hike in the state advised price (SAP) of sugarcane by the UP government to Rs 305 a quintal for 2016-17 (October-September) from Rs 280 a quintal in the previous season, the cost of production of sugar has increased by about Rs 4 to Rs 34 a kg.
Mills claim the raw material (sugarcane) cost has about 70 per cent share in the production cost. This year, it is not just UP, but even other states have cane arrears. Mills in Karnataka owe Rs 910 crore to cane farmers as of February 1 while the dues in Gujarat are pegged at Rs 455 crore, Tamil Nadu Rs 400 crore and Maharashtra at Rs 363 crore.
Compared with UP’s SAP of Rs 305 a quintal, other states will buy cane at the Centre’s fair and remunerative price (FRP) of Rs 230 a quintal in 2016-17.
Prime minister Narendra Modi during the runup to UP elections said BJP will ensure that farmers get their cane dues from mills within 14 days after the sale.
An industry official said the current arrears of cane are functional dues, which will be cleared in due course. In Gujarat, for instance, mills normally hold up a certain percentage of the dues and clear it after the closure in March-April, he added.
Bajaj Hindusthan Sugar has reported a net loss of Rs 36.63 crore for the quarter ended December on lower sales and high finance cost. Its net loss stood at Rs 70.14 crore in the year-ago period.
Meanwhile, premium of white sugar futures over raw variety in London increased $12 this week to $103 per tonne, near highest since October, as global market expects higher demand for white sugar from India and China.
Traders are expecting a decision by India to scrap import duty of 40 per cent in the coming months. They say India may import 2.4 million tonnes of sugar for domestic use.
India’s sugar production in 2016-17 is expected to be around 20.3 million tonnes, down from 25.1 million tonnes in the previous year.