Rising sugar prices and the manufacturers' need to safeguard future supplies have helped wipe out cash arrears due to cane growers. The arrears have fallen to a 'negligible' level from being as high as Rs 1,780 crore (Rs 17.8 billion) in 2002-03.
According to the Indian Sugar Mills' Association, the arrears have come down despite an increase in cane price from Rs 85 a quintal to Rs 120 over the same period. It must be added, however, that sugar prices too have firmed up -- from Rs 1,119 a quintal in 2002-03 to Rs 1,750.
Experts said most sugar companies wanted to keep farmers in sound financial health as they were expanding capacity and wanted adequate supplies of cane.
This made them clear arrears due to growers as early as possible. After a good run of three years, several sugar companies including Bajaj Hindusthan, Mawana Sugars, Triveni and Balrampur Chini Mills have lined up sizeable expansion plans.
Simbhaoli Sugar Chief Financial Officer Sanjay Tapriya said the sugar mills paid on time to ensure the farmers continued to supply cane next season. Dwarikesh Sugar Chief General Manager J K Banka said the millers earned good profits last season and hence could pay on time.
According to an ISMA official, the main reason behind the huge dues in the past was the large carry-over stock of sugar which, in turn, was responsible for lower price realisation and delayed payments.
The carry-over stock in 2002 amounted to 113 lakh tonne and, as a result, the price per quintal dropped from Rs 1,268 in 2001 to Rs 1,119 in 2002.
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