Bittersweet: Rs 168.83 billion due to sugarcane farmers in the country; 45% of this to UP farmers

Sugar mills in the country owe farmers Rs 168.83 billion in dues, Union minister Piyush Goyal told Parliament. Uttar Pradesh owes the most at Rs 75.55 billion. A Supreme Court hearing on February 12 offers a glimmer of hope as it has issued notices to 15 sugarcane-producing states, including Uttar Pradesh and Maharashtra, to settle dues.

Arvind Shukla
| Updated: February 17th, 2021

Photo: Arvind Shukla

Alok Mishra is a sugarcane farmer from Fattepur village in Uttar Pradesh’s Lakhimpur Kheri, called the country’s sugar bowl. But his life is anything but sweet. The sugar mill where he sent his sugarcane owed him Rs 6 lakh for last year, and paid him only this year. “What is the use of farming when we are unable to pay our children’s school fees on time and have to borrow money from others to run our home?” Mishra asked Gaon Connection. He has also taken a loan of Rs 3 lakh on the Kisan Credit Card for cultivation, for which he has to pay interest of seven per cent — the government pays three per cent and the farmer four per cent.

Mishra’s family that cultivated only sugarcane on six hectares, now cultivates bananas on 1.6 hectares. “I’ve already sent cane worth three lakh rupees to the Khamaria Sugar Mill this year. During campaigning for the 2017 Assembly elections in Uttar Pradesh, our prime minister visited Lakhimpur and assured us of payment within fourteen days. I say it would be all right if they paid at least in fourteen months,” he rued.

There is some hope now for Mishra and others like him following a recent February 12 Supreme Court hearing. The apex court issued notices to 15 sugarcane-producing states, including Uttar Pradesh and Maharashtra to settle the pending dues.

Sugar mills across the country have withheld payments running into crores to sugarcane farmers. Photo: Arvind Shukla

According to a petition heard by a three-member bench headed by Chief Justice SA Bobde, sugarcane farmers across the country are yet to be paid about Rs 156.83 billion as on September 10 last year. The highest pending amount of Rs 101.74 billion is in Uttar Pradesh. The plea, by Uttar Pradesh-based farmer Lokesh Kumar Dhody and nine others, mentioned that due to non-payment of dues, distressed farmers were ending their lives. It argued for a provision to lodge a first information report (FIR) against sugar mills that do not pay dues, and declare them defaulters. This amount owed has only increased over the months.

In response to a question in the Lok Sabha on February 9 this year, the ministry of consumer affairs, food and public distribution, headed by Piyush Goyal, said that sugar mills across the country owed farmers Rs 168.83 billion till January 31 this year. Mills in Uttar Pradesh still have the highest amount pending of Rs 75.55 billion (down from September 2020’s Rs 101.74 billion, because payments are being made), in Karnataka 35.85 billion and in Maharashtra Rs 20.30 billion. “Payment by mills to farmers is a continuous process, and it has been consistently improved due to the government’s efforts,” Goyal claimed.

No increase in state advised price for sugarcane

Like the minimum support price (MSP) for paddy and wheat, the Centre also decides the fair and remunerative price (FRP) for sugarcane. This is the minimum price sugar mills have to pay farmers. However, certain state governments, including Uttar Pradesh, decide a state advised price, on top of FRP.

For the third consecutive year, there has been no increase in sugarcane price for the crushing season 2020-2021 in Uttar Pradesh. Two days back, on February 15, it was announced that regular sugarcane would be paid Rs 315 a quintal while the price for the early variety would be fixed at Rs 325 a quintal. Rejected varieties remain at Rs 310 a quintal. The last revision had happened in the crushing session 2017-2018, when the state government increased the state advised price of sugarcane by Rs 10 a quintal. The FRP is Rs 285 a quintal.

Mills in Uttar Pradesh still have the highest amount pending of Rs 75.55 billion. Photo: Arvind Shukla

This has further crushed the hopes of sugarcane farmers. Chaudhary Kulveer Singh, 60, from Bijnor district is a progressive farmer who adopts the latest know-how in his farm. He told Gaon Connection that when the cost of everything else has gone up, this decision would sound the death-knell for farming. “The harvesting cost used to be twenty rupees a quintal four years ago. Now it is forty rupees. A litre of diesel has gone up from sixty rupees to eighty. Two years ago, I paid seven thousand rupees for a year’s electricity. Now, I pay close to twenty four thousand. The non-increase in sugarcane rate effectively translates to a reduction, because input costs have risen,” said Kulveer Singh, who has reduced his acreage under sugarcane from 10 hectares to eight. 

Meanwhile, VM Singh, convener of the Rashtriya Kisan Mazdoor Sangathan, who has been fighting a long legal battle in the interest of sugarcane farmers, is expecting a hearing next week on his petition filed in the Allahabad High Court over sugarcane dues. “Unless there is a provision of interest on payments delayed beyond fourteen days, they won’t pay farmers on time,” he told Gaon Connection.

Also Read: Better days lie ahead for UP’s farmers, battling non-payment of cane dues and COVID-19

For the third consecutive year, there has been no increase in sugarcane price for the crushing season 2020-2021 in Uttar Pradesh. Photo: Arvind Shukla

Low demand, crashing cost of sugar plague mills

On the delay in payment to farmers, the government clarified in the Lok Sabha that “production of sugar has increased vis-a-vis demand in the last three years, and there has been a slowdown in the ex-price of sugar, which adversely affected the cash flow of sugar mills and increased farmers’ dues”.

Speaking about the issue, Vikramsinh Shinde, president (technical) of Bhartiya Sugar and vice president (technical) of Deccan Sugar, told Gaon Connection: “Sugar mills are continuously incurring losses. One tonne of sugarcane costs three thousand rupees [Rs 30 a kg]. Sugar sells at twenty eight rupees a kilo. How can mills stay afloat?”

Shinde also cultivates sugarcane in Solapur in Maharashtra and gives 1,200 tonnes of sugarcane to sugar mills every year. He said the condition of sugar mills in Maharashtra is so acute that even if the payment is delayed by a month, one faces incrimination. Though the government had declared the sugar rate at Rs 31 a kg, many mills sell their sugar for Rs 28 a kg to be able to pay farmers’ dues. 

This claim is contested by VM Singh. “If sugar mills are facing losses, how have they managed to set up so many mills? These people take ‘packages’ from the government and make the farmers wait for their payments,” he claimed. According to a reply in the Lok Sabha, from 2016-17 to 2020-21, in order to streamline payment to sugarcane farmers, the government provided a package of Rs 140.70 billion to the industry towards soft loans under various heads. 

India has 493 operating sugar mills, while 202 are defunct. Photo: Arvind Shukla

Protests over non-payment

Much before the farmers’ agitation over the agri laws, the Bhartiya Kisan Union had staged a 20-day protest in November last year for pending payments to farmers in Muzaffarnagar in Uttar Pradesh. “We demand the government release our sugarcane payments within fourteen days and provide us sugarcane rate as per the recommendations of the Swaminathan Commission,” Dharmendra Malik, media in-charge, told Gaon Connection

“Payments worth crores are pending. All the packages announced by the government in the name of the farmer have been appropriated by sugar mills,” he alleged.

This issue has political ramifications too. Uttar Pradesh’s budget will be presented on February 22. Congress national general secretary Priyanka Gandhi has been attending numerous farmer mahapanchayats in western UP, where the sugarcane issue is a burning topic. She has also been tweeting against pending dues. 

India has 493 operating sugar mills, while 202 are defunct. Maharashtra has the highest number of sugar mills (182), followed by Uttar Pradesh (120) and Karnataka (65). Speaking about the future of mills at a time when demand for sugar is low, Shinde told Gaon Connection that “the remedy lies in expanding production of by-products such as ethanol. Earlier, ethanol could be only extracted from molasses, but now we are allowed to make ethanol directly from the sugarcane juice. This will help sugar mills immensely. I believe that in the next three to four years, good days will return for sugar mills and sugarcane farmers.”

With inputs from Mohit Shukla.

Read the story in Hindi.