Payment arrears from sugar mills to cane farmers go up to ₹23,000 crore

Appeal made to Centre to hike the minimum selling price of sugar

Halfway through the marketing season, payment arrears from sugar mills to cane farmers have almost reached ₹23,000 crore, leading mills to lobby for the Centre to hike the minimum selling price of sugar. With regard to exports, millers hope that the decision to permit sales to Pakistan and facilitate sales to Iran will help meet targets.

Central government data showed that, as on February 28, dues of ₹22,900 crore were pending for the cane procured in the current season, which began in October 2020. March and April make up the peak crushing season for sugar. A year ago, arrears stood at around ₹19,200 crore.

Data from the Uttar Pradesh government shows that more than half the dues are owed to farmers in that State. By mid-March, dues to U.P. farmers for the current season had crossed ₹13,600 crore. Farmers from the sugarcane belt of western U.P. make up the bulk of protesters at the Ghazipur border site. They have been raising the issue of pending sugarcane dues, along with the wider issue of the repeal of the three farm reform laws.

“The prevailing low ex-mill sugar prices for the last several months, has adversely affected the liquidity of mills and their ability to pay the FRP [Fair and Remunerative Price] to cane farmers,” said the Indian Sugar Mills Association. “The cane farmers and sugar mills are hopeful of an early announcement by the government regarding increase in MSP of sugar as a measure to improve revenue realisation by mills and payment to farmers, which will in turn ease the current situation of very high cane price arrears. Otherwise, it is feared that if current situation persists, then cane price arrears will jump very fast to alarming levels,” it added.

Apart from price hikes, the other way to increase liquidity is reduce surplus stocks through exports. ISMA estimates that contracts worth 45 lakh tonnes have already been made. The export target for the marketing year ending September 2021 is 60 lakh tonnes.

“The Pakistan government has allowed import of 5 lakh tonnes of sugar, and has recently permitted sugar imports from India too,” said ISMA, noting that this resumption of imports would open a new market for Indian sellers. “Meanwhile, it is learnt that the government is working to find alternate currency exchange options to facilitate sugar exports to Iran and we are hopeful of an early solution,” it added.

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