Sugar mills have surpassed their 60 lakh metric tonne export target this year, making it easier for them to pay cane farmers and reducing arrears for this year to less than ₹9,000 crore, according to government data. Pending dues to cane farmers are a thorny political issue in several States, provoking protests in western Uttar Pradesh and Punjab. Earlier this month, the Supreme Court issued notices to 11 States and major sugar producers to develop a mechanism to ensure that farmers are paid on time.
Given that India produces more sugar than it consumes, leading to liquidity concerns for mills and delayed payments to farmers, the Centre has been encouraging diversion to exports and ethanol production. Exports have increased more than ten times from just 6.2 lakh metric tonnes in 2017-18, with the Centre now providing assistance to the tune of ₹6,000 per tonne to facilitate exports.
As against an export target of 60 lakh tonnes this year, contracts of about 70 lakh tonnes have been signed, according to a statement from the Food Ministry on Thursday. As global prices have also spiked substantially in the last month and there is high demand for Indian sugar in the international market, the Ministry has advised domestic mills to sign forward contracts with importers for the next season, and some have already done so.
Along with the diversion for ethanol production, which the government sees as a more permanent solution to the problem of surplus stocks, the export revenue has allowed mills to partially pay off their dues to cane farmers. At the end of May, unpaid cane dues for 2021-21 stood at ₹18,820 crore, along with pending payments from previous years worth ₹2,501 crore. However, by mid-August, mills had bought a record ₹90,872 crore worth of cane from farmers, against which ₹81,963 crore have been paid, leaving arrears of ₹8,909 crore. Pending payments from previous years are also down to ₹142 crore.
By law, cane farmers must be paid within 15 days of delivery. On August 4, the Supreme Court issued notices to 11 cane growing States as well as industry bodies to respond to a plea from Maharashtra farmers to set up a mechanism to ensure timely payment and attach the assets of mills with accumulated arrears.
Protest today in Punjab
In Punjab, farm unions will block rail and road traffic on Friday, with a dharna on the Jalandhar highway, demanding that pending arrears of ₹200 crore from the last season, mostly from private mills, be cleared immediately. They are also demanding higher prices, noting that Punjab rates lag behind other States, according to the Samyukt Kisan Morcha. Most protesters at the SKM’s protest site in Ghazipur hail from the western Uttar Pradesh sugar belt, and have also been agitating for timely payment of arrears, threatening to make it an electoral issue in next year’s Assembly polls.