Controlling 24 sugar mills across the state, UP Co-operative Sugar Factories Federation Limited will borrow Rs 3,650 crore from banks in the 2020-21 crushing season to pay off farmers for procurement of cane.
The projected loans/cash-credit limit of Rs 3,650 crore to be taken by the Federation this season is 13 per cent higher as compared to corresponding amount of Rs 3,221 crore in the 2019-20 crushing cycle.
The state government will stand as guarantor for the credit facility totalling Rs 3,650 crore to be availed of by the Federation from UP Co-operative Banks - the apex cooperative bank of the state. A proposal in this regard was recently cleared by the UP cabinet. The government has also decided to waive off Rs 9.12 crore as government guarantee fee on the Federation for 2020-21 standing the guarantee.
Owing to precarious financial condition of the Federation and sugar mills under its control, the government steps in every year to stand guarantee for such borrowings by the Federation.
Co-operative sector sugar mills not only have lower crushing capacity, but are carrying on with obsolete plants and machinery, impairing their competitiveness and productivity vis-Ã -vis 94 private sugar mills in UP.
However, the state government is now working on a roadmap to upgrade these factories and develop them as integrated plants that cogenerate power and produce ethanol apart from sugar from the next crushing season.
UP is the country’s top sugar and sugarcane producer and logged 12.65 million tonnes (MT) of sugar in the 2019-20 season, which was more than 45 per cent of India’s sugar production of 27.2 MT. The state’s annual sugarcane economy is pegged at nearly Rs 50,000 crore.
As per preliminary estimates, UP has a bumper cane crop in the 2020-21 season spanning 2.29 million hectares. As per Indian Sugar Mills Association (ISMA), domestic sugar production was estimated at 30.5 MT in 2020-21, which would be 12 per cent higher than 27.2 MT in 2019-20. UP is estimated to have sugar output of 12.3 MT.
In September, Chief Minister Yogi Adityanath had announced that mills in the western and eastern parts would start crushing from October 15 and 25 respectively. Timely start to crushing would give farmers ample time for successive wheat sowing as well.
However, a sugar industry official said that while the crushing in UP was expected to begin early compared to last season due to the bumper crop, yet it would be difficult to commence crushing in October .