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15 sugar mills in Punjab owe ₹738 crore to cane growers

Grim scenario predicted for the forthcoming season as mill owners have not signed agreement with growers for the crushing season that begins in November.

punjab Updated: Aug 11, 2018 10:48 IST
Gurpreet Singh Nibber
Gurpreet Singh Nibber
Hindustan Times, Chandigarh
sugar mills,sugar mills in Punjab,Punjab sugar mills
(Representative Image)

Nine sugar mills in the cooperative sector and six of seven private mills in the state owe sugar cane growers ₹738 crore, since the last crushing season that ended in April.

Consequently, a grim scenario is predicted for the forthcoming season as sugar mills have not signed Memoranda of Understanding (MoU) with sugarcane growers for the crushing season that begins in November. Only a privately owned mill in Amloh that the Oswals run has made 100% payment to the farmers.

“Two private mills – one in Buttar Sevian that the Ranas own and in Phagwara, of the Wahid group, owes the maximum amount to the farmers,” a state government official said, on condition of anonymity. The cooperative department refused to give the details of amount each mill owes to the farmers.

“The State Advised Price (₹310 a quintal) on cane is ₹55 a quintal more than the fair remunerative price (FRP) of ₹255 that the Centre has fixed. However, the state doesn’t reimburse the gap. Also, the state has fixed a quota to sell only 25,000 quintal of sugar each month,” said Jarnail Singh Wahid, who owns the Phagwara mill and heads the Private Mill Owners’ Association.

“In addition to all this, sugar prices have fallen, where will mill owners go, their losses are rising. When it doesn’t make good business sense, how we can buy sugarcane,” Wahid adds.

Private mills owe 60% of dues

Of the pending payment, cooperative mills owe farmers ₹290 crore (40%) with the private mills owing ₹448 crore (60%). Sugarfed, the state’s federation, that manages the working of cooperative sugar mills has moved a case with the state government for release of payments to farmers.

“Payment has been delayed. Last season’s payments have been made now, and we don’t know when are we getting payment for the current season?,” says Sukhjit Singh of Bhamah, who had grown cane over 48 acre.

He claimed that the cooperative mill in Budewal owes him ₹35 lakh and instead of making his payment they have arranged a loan of ₹5 lakh for him on 11% rate of interest for meeting day-to-day farming expenses.

“Let us see when we get the payment, how we return the loan and how much interest is charged. See the irony, the mill gives us sugar only on cash payment,” he told HT.

“As the payments are irregular, sugarcane is not a beneficial crop, I have decided to shift to wheat and paddy and have sown paddy over 20 acre,” he said.

Balbir Singh Rajewal, president of a faction of Bharatiya Kisan Union, said the state government’s diversification plan had gone for a toss this season, as mills are not signing agreements with farmers to purchase sugarcane in the next season.

“We may not have signed an agreement with the farmers, but it is sure that the cane will come to us and we will process it,” said an officer of the cooperative department. “We have cleared all payments of cane season 2016-17. The government had given us a budget of ₹180 crore for cooperative sector mills. Of this, ₹90 crore have been sanctioned and the remaining ₹100 crore will be cleared in two-three months,” additional chief secretary cooperation, DP Reddy, told HT.

Area under cane up

In spite of pending payments, the area under sugarcane this season has increased by 10,000 hectare from 95,000 hectare to 1.05 lakh hectare. Last season, the sucrose recovery from the cane was recorded at an all-time high of 9.77%; this translates into good earnings for mills.

Last season, 842 lakh quintal sugarcane was processed, of which 82 lakh quintal sugar was produced. This was 25% more than the season before. “High quantity sugar was produced this season, I fail to understand why payment is not made to cane growers,” said director, agriculture, JS Bains.

First Published: Aug 11, 2018 10:46 IST