UP accounts for highest unpaid dues to cane farmers at 66.7%
Sugarcane arrears to farmers have increased in the 2021-22 sugar season (October-September) by Rs 5,775 crore from the previous season with Uttar Pradesh having the highest unpaid amount due to farmers.
As per the data compiled by the Commission for Agricultural Costs and Prices (CACP) in its ‘Price Policy for Sugarcane: 2023-24 Sugar Season’, as on September 30, 2022, cumulative cane price arrears were Rs 8,380 crore, out of which Rs 5,910 crore account for the 2021-22 season, which is significantly higher than Rs 135 crore for the 2020-21 season, an increase of 4,277.7%.
CACP said among all the states, Uttar Pradesh accounts for 66.7% (Rs 3,945 crore) of the total cane price arrears during 2021-22 followed by Gujarat at Rs 999 crore (16.9%), Maharashtra at Rs 349 crore (5.9%), and Tamil Nadu at Rs 221 crore (3.7%). UP (47.7%), Tamil Nadu (20%), Gujarat (12.4%) and Maharashtra (9.3%) recorded the major share of cumulative sugarcane arrears.
CACP mentioned in the 2023-24 sugarcane price policy, “The cane price arrears have been increasing during the last two years due to excess production and lower sugar prices in both domestic and world markets. The increase in outstanding arrears and delayed payment is neither in favour of farmers nor the sugar mills.”
The commission remarked in the policy that the states of Haryana, Punjab, Uttarakhand and Uttar Pradesh declare the State Advised Price (SAP) for sugarcane, which is higher than the Fair and Remunerative Price (FRP) announced by the Indian government. “Since SAP is not determined scientifically and not linked to sugar recovery unlike FRP, it does not incentivise farmers to produce high quality sugarcane. On the other hand, FRP is linked to basic recovery rate of sugar with a premium payable to farmers for higher recovery of sugar. Since sugar mills are required to pay SAP, which is higher than the FRP, this leads to mounting cane price arrears, especially when sugar prices are low.”
CACP stated that during 2021-22, SAP in all four states was hiked, thereby widening the gap between SAP and FRP in Punjab, Haryana and Uttarakhand. In the sugarcane price policy for 2023-24, the commission has reiterated its earlier recommendation that the state governments should refrain from announcing SAP.
It observed in case the state governments wanted to continue with SAP, they should pay the difference between SAP and FRP directly to cane farmers through Direct Benefit Transfer (DBT) and not force the mills to bear the additional burden.
Details of cane price arrears
| State | Up to 2019-20 (Rs crore) | 2020-21 | 2021-22* | Cumulative arrears | ||
| Rs crore | Percentage | Rs crore | Percentage | |||
| Uttar Pradesh | 42 | 11 | 3,943 | 66.7% | 3,996 | 47.7% |
| Gujarat | 36 | 0 | 999 | 16.9% | 1,035 | 12.4% |
| Maharashtra | 317 | 111 | 349 | 5.9% | 777 | 9.3% |
| Tamil Nadu | 1,453 | 0 | 221 | 3.7% | 1,674 | 20% |
| Andhra Pradesh | 75 | 2 | 42 | 0.7% | 119 | 1.4% |
| Karnataka | 38 | 0 | — | 0 | 38 | 0.5% |
| Chhattisgarh | 8 | 0 | 0 | 0 | 8 | 0.1% |
| Haryana | 0 | 0 | 63 | 1.1% | 63 | 0.8% |
| Uttarakhand | 205 | 0 | 34 | 0.6% | 239 | 2.9% |
| Punjab | 31 | 7 | 58 | 1% | 96 | 1.1% |
| Telangana | 0 | 0 | 0 | 0 | 0 | 0 |
| Bihar | 128 | 4 | 0 | 0 | 132 | 1.6% |
| Other states | 0 | 0 | 201 | 3.4% | 203 | 2.4% |
| All India | 2,335 | 135 | 5,910 | 100% | 8,380 | 100% |
Note: *as on September 30, 2022, for sugar season 2020-22
Source: Directorate of Sugar & Vegetable Oils, Ministry of Consumer Affairs, Food & Public Distribution
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