Decline in cane arrears as mills cash flow improves

Soft loans and the enthusiastic response to increased ethanol-blended petrol appear to have improved cash flows to sugar mills leading to a sharp decline in cane arrears to farmers.

The cane arrears of farmers that were reigning at Rs 21,000 crore last year, have declined to Rs 2,700 crore as on January 12, much less than the corresponding period in the last sugar season, the Ministry for Consumer Affairs, Food and Public Distribution said in a statement here.

In December, the Modi government had announced doubling of the target of blending ethanol in gasoline to 10 per cent and offered incentives to mill owners to set up ethanol production plants in their units.

However, of the Rs 2,700 crore cane arrears owed by sugar mills to farmers of Uttar Pradesh tops the list with Rs 1,181 crore followed by Tamil Nadu (Rs 385 crore), Karnataka (Rs 374 crore) and Maharashtra (Rs 321 crore).

In the last three months, sugar mills have already supplied 6.82 crore litres of ethanol to Oil Marketing Companies when compared to 1.92 crore litres during the corresponding period last season.

For the current sugar season — December 2015 to November 2016 — sugar mills have offered to supply 147 crore litres of ethanol and OMCs have already contracted 120 crore litres for blending it with petrol —an increase of 40 crore litres over last year.