Dues To Sugarcane Growers Top

G. Chandrashekhar Mumbai: A total of over Rs 3,900 crore is the amount outstanding from sugar mills as arrears for sugarcane procured from growers as of January 15 this year, the Government stated in Parliament recently.

The dues cover the sugar season till 2007-08.

The share of the private sector mills is the largest at Rs 2,321 crore representing close to 60 per cent of the total arrears of Rs 3,922.15 crore, while the co-operative sector with arrears of Rs 1,474.15 crore accounts for slightly less than 40 per cent.

The rest is owed by the public sector.

Usually, the private sector’s cane arrears would be higher than that of co-operatives.

But in the current sugar season 2007-08, the cane arrears of co-operatives (Rs 1251.39) are higher than that of the private mills (Rs 1138.23).

Buffer stock
Disclosing details of outstanding payment of sugarcane dues, the Minister of State for Agriculture as well as for Consumer Affairs, Food and Public Distribution, Akhilesh Prasad Singh, stated in the Rajya Sabha that the buffer stock created by the Government was aimed at enhancing the liquidity of sugar mills affected by decline in sugar prices and stock value.

The buffer stock creation involved an annual subsidy of Rs 880 crore from the Sugar Development Fund and there is an additional bank credit of about Rs 978 crore. Improved liquidity would help clear cane price arrears as first priority, he said.

The payment of cane arrears and announcement of State Advised Price (SAP) by the State governments over and above the Statutory Minimum Price (SMP) for cane announced by the Union Government continues to be a subject of litigation in courts.

Falling prices

It is also believed that falling sugar prices constrained the capacity of sugar mills to pay cane price to growers in time. Due to high level of sugar production during the last season 2006-07 and initial estimate of high production during the current season 2007-08, sugar prices had declined considerably.

No report of farmers giving up sugarcane cultivation as a result of hardship faced by them due to pending dues has been received, the Government stated in response to concerns that area under sugarcane may shrink.

SC Stays HC Order On Sugarcane Pricing

New Delhi: In a setback for the sugar industry, the Supreme Court has stayed the December 19 order of the Allahabad High Court quashing the Uttar Pradesh (UP) Government’s State Advised Price (SAP) of Rs 125-130 per quintal, payable by mills for cane bought during the 2006-07 season (October-September).

HC findings

A three-judge bench of the apex court — comprising the Chief Justice, K.G. Balakrishnan, Justice G.P. Mathur, and Justice R.V. Raveendran — on Friday, stayed the operation of the December 19 order. The latter had declared the SAP fixed for 2006-07 as “arbitrary” and “unreasonable”. It had also directed the State Government to reassess the SAP “backed by reasons giving adequate outlines of norms, criteria or guidelines”, with this price to be decided only after consulting all stakeholders and not unilaterally.

Consequences of the stay

The High Court bench of Justice Amitava Lala and Justice V.C. Mishra had further ruled that until such time that the new SAP was fixed, mills were obliged to pay only the Centre’s statutory minimum price (SMP), ranging between Rs 85-90 per quintal for the 2006-07 season.

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However, with the Supreme Court now staying this order, it would mean that the factories will have to discharge their outstanding SAP cane arrears, which amounts to around Rs 900 crore for private mills alone. Also, the recovery certificates (RCs) that were issued by the State Government against mills that had not paid the SAP would stand revived. The RCs empower the district magistrate concerned to seize the sugar stocks, plant and machinery, and land of the defaulting factory and put them up for auction in order to pay the growers.

Next hearing

The apex Court, while staying the order of the Allahabad High Court, has fixed the next date of hearing of the case on February 12, with the respondents seeking two weeks time to file counter-affidavits. The Supreme Court’s ruling was in response to a petition against the December 19 order filed by V.M. Singh of the Kisan Mazdoor Sangathan and the cane unions of Paliakalan and Basti. Separate petitions were also filed by the UP Government and the UP Cooperative Sugarcane Federation.

On Thursday, the Allahabad High Court had also exempted mills from paying the interim cane price of Rs 110 per quintal (fixed by a separate Lucknow bench) for the current 2007-08 season.

The Court had interpreted that since the UP Government had not yet complied with the December 19 order — requiring fixation of norms, criteria and guidelines for arriving at the SAP — there was no need for the mills to pay anything more than the Centre’s SMP. But with the Supreme Court staying the December 19 order, mills may for now have no option but to pay the SAP of Rs 125-130 per quintal fixed for the 2007-08 season as well.