State sugar mills owe maximum arrears

Dues attributed to high production, low prices

The standing committee on food, public distribution and consumer affairs of the 15th Lok Sabha noted that total cane price arrears stood at Rs 951.08 crore in Karnataka on January 15, 2010, with outstanding for the 2010-11 sugar season being Rs 928.48 crore. Only Maharashtra (Rs 1,178.71 crore) and Uttar Pradesh (Rs 1,157.04 crore)  had higher arrears than Karnataka.

The Centre should provide assistance and incentives to sugar mills subject to liquidation of cane arrears, the panel recommended in its 12th report presented to the Lok Sabha.
“In case of default, such aid/assistance should be suspended and strict action taken against defaulting sugar mills under the provision of this Order (Sugarcane Control Order, 1966),” it stated.

Minister of State (Independent Charge) for Consumer Affairs, Food and Public Distribution K V Thomas said the arrears got accumulated mainly due to excess production of sugar in the season leading to decline in prices making it difficult for sugar mills to pay cane price and arrears to farmers.

Replying to a query in the Lok Sabha, Thomas said the state-advised prices, being generally higher than the fair and remunerative price, were also “another reason for building up cane price arrears.”

Mills leased out

According to the report, the Ministry of Food, Consumer Affairs and Public Distribution informed the parliamentary standing committee that the Karnataka government had leased out two sugar mills—Bhadra SSK Ltd and Dakshina Kannada SSK Ltd— to clear the cane price arrears of Rs 17.52 lakh and Rs 192.78 lakh, respectively.

The process of recovering

Rs 930 lakh from Naranja SSK and Rs 287 lakh from Dyanyogi Sugars is on. The Siraguppa Sugar Ltd in Gauribidanur had agreed to clear all dues to the farmers with interest.

Besides, the High Court had ordered financing banks to recover their dues by public auction of Badami Sugars Ltd and  giving preference to clearing the cane bills from the amount recovered by the public auction of the property, the ministry reported to the committee.

Thomas informed the House that the nationwide cane price arrears had stood at Rs 2,591.79 crore – 6.25 per cent of the price payable for the 2010-11 season  on May 15.
Besides, Rs 211.22 crore was pending for payment for the previous seasons.

The panel said it was not convinced with the ministry’s explanation that cane price arrears are generally high in the beginning of the season and start declining as the season advances.

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