Cane crisis far from over, mills to get 40% loan to clear dues

Ruchika M Khanna

Tribune News Service

Chandigarh, August 31

Punjab will get just 40 per cent of its total requirement of finance for clearing dues of sugarcane growers, in the Rs6,000 crore package for cane growers approved by the Union Government in June.

While almost all sugar mills in Punjab – nine cooperative and seven private — have already paid 80 per cent of the dues to the farmers, together these mills still owe Rs299 crore to the farmers. However, under the Centre’s assistance package, where banks have been asked to finance Rs6,000 crore to the sugar mills across the country, Punjab is expected to get just a little over Rs124 crore.

Sources in the government told The Tribune that in a series of meetings held last week between officials of the Agriculture Department with their counterparts at the Centre, Punjab could hope to get anything between Rs123 crore and Rs126 crore.

The amount of finance that the state could get is based on a formula worked out by the Centre, where 11 per cent of the value of total sugar produced in the state in 2013-14 (taking base value of Rs2,400 per quintal) will be allocated for advance to the sugar mills in Punjab.

“As per this formula, banks can finance Rs124 crore to sugar mills, provided they are willing to give the collateral for securing this loan,” said a senior agricultural official. Since all sugar mills in the state have cleared the mandatory 50 per cent dues to framers, they are eligible to avail this finance, to be repaid over seven years. The mills will get a two-year moratorium on repayment of loans and the loans will have to be repaid in the subsequent five years. The interest on loan will be waived for a year. The mills will have to pay interest on loan for the remaining six years.

Across the country, sugar mills are yet to clear dues amounting to Rs16,200 crore to cane growers, with maximum dues to be cleared by mills in Uttar Pradesh Rs7,645 crore). Haryana, like Punjab, is to clear just Rs280 crore.

It is estimated that because of higher cane crushing capacity of Punjab’s private sugar mills (34,000 tonnes per day), the cane crushing capacity of the nine cooperative mills is just 15,766 tonnes per day. “Since crushing capacity of private mills is much more, two-third of the finance will go to them and one-third to the cooperative mills,” said a senior functionary in the Agriculture Department.

Six private sugar mills (as one has already cleared all dues) owe Rs209 crore to the farmers, while the cooperative sugar mills owe just Rs90 crore to farmers. Only one private sugar mill has so far cleared all its dues, while the others collectively owe Rs209 crore to the growers.