• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
BW Businessworld

UP Govt Keeping Close Watch On 4 Sugar Groups Delaying Cane Payment To Farmers

Mills have manufactured 11.05 million tonne of sugar so far, lower than 12.63 million tonne from the year-ago period, due to diversion to ethanol and khansari.

Photo Credit : Reuters


The Uttar Pradesh government is keeping a close watch on four sugar groups -- Bajaj Hindustan, Modi, Simbhaoli and Yadus -- which are laggards in clearing the cane payment to farmers, state sugar minister Suresh Rana said on Thursday.

Less than Rs 10,000 crore cane dues are yet to be cleared by mills in the state in the ongoing 2020-21 sugar season (October-September), much of it belonging to these groups, he said.

Several measures were taken by the BJP-led Uttar Pradesh to ensure mills make cane payment to farmers on time. As a result, the entire cane payment of about Rs 1,37,518 crore belonging to the last three seasons was cleared to farmers, he added.

In a virtual media interaction, Uttar Pradesh Sugar and Cane Development Minister Rana said: 'About 90 mills in UP have paid 90 per cent of the cane price to farmers. Making 90 per cent payment to farmers during the pandemic is a big thing'.

However, there are four groups, including Bajaj Hindustan, Simbhaoli and Modi, that are delaying cane payment, on which the government is keeping a close watch, he said.

'We have issued recovery certificates to these groups. Upon direction from the CM, we are keeping a close watch on these groups, be it Modi, Simabholi and Bajaj Hindustan. We are taking regular action against them,' Rana added.

There are 120 sugar mills in Uttar Pradesh, out of which 21 mills belong to the four sugar groups, which are laggards in clearing cane dues, according to the state government.

Highlighting the measures taken to ensure timely cane payment in the state, the minister said soon after the Yogi Adityanath-government came to the power, the state government made it mandatory for mills to open an escrow account under which 85 per cent of the sale proceeds of primary and second cane products were deposited for making cane payment to the farmers.

Explaining to PTI separately, Cane Commissioner Sanjay R Bhoosreddy said earlier, mills used to divert funds for other purposes. But after setting up an escrow account, the money deposited was used directly for payment of cane price to the farmers.

For instance, a purchaser of sugar from mills is required to deposit 85 per cent of the price of the commodity in the escrow account and the rest 15 per cent to the seller i.e. sugar mills. Gradually, molasses, bagasse, ethanol and even sanitiser were added.

But there has been a problem with the four groups in making cane payment on time, he said.

In the case of Modi Group, the company delays in making payment, but it pays with interest on it and therefore farmers don't have an issue much, although the state government is impressing on it to pay the cane price to farmers on time, the commissioner added.

Whereas other groups have liquidity issues, due to which bankers are not keen to give a cash credit to them and few of them are not able to take benefit of central government's ethanol projects and enhance their business, he said.

'The state government is persuading these four groups to pay on time. We are insisting them to pay at least 50 per cent of the cane payment of the current season,' the official added.

To curb fraudulent activities and protect the interest of cane growers, the minister said the state government banned 3 lakh 'manual parchi systems' in the state and introduced an electronic 'parchi distribution system' that allows sugar mills to generate automatic sugarcane 'parchi'.

Due to this system, cane growers were easily able to supply their cane to sugar mills at the right time even during the pandemic, he added.

'Under the Samajwadi Party and BSP governments, sugarcane farmers had to run from pillar to post for their cane dues. Troubled by the situation, many farmers were giving up on sugarcane production,” Rana said.

But Yogi-government's steps to bring transparency in the sugar sector, use of new cane varieties and timely payment of the cane price have motivated farmers to grow cane, due to which the area under the crop has increased in the last few years, he said.

Sugar production in Uttar Pradesh, the country's leading sugar producing state, has also increased over the years.

In the current 2020-21 season, mills have manufactured 11.05 million tonne of sugar so far, lower than 12.63 million tonne from the year-ago period, due to diversion to ethanol and khansari.

Among other steps, the minister said the state government made sure that no mills in the state were shut nor sold unlike in the previous regime. Rather, the government upgraded 11 mills and opened three new mills at Gorakhpur, Basti and Baghpat.

New distilleries were also opened in the state and as a result, ethanol production rose to an all-time high of 280 crore litres from 54 distilleries from 2017-19 till January of this year, he noted.

The state government has also issued licenses for setting up 267 new Khandsari units for the first time in 25 years. Out of which, 176 units have been operationalised. With an investment of Rs 388 crore in these units, about 20,000 people will get employment opportunities, he added.

It may be noted that 47 per cent of the sugar production in the country is being produced in Uttar Pradesh. The sugarcane sector contributes 8.45 per cent to the state's GDP and 20.18 per cent to the GDP of the agriculture sector.