Not paid for last year’s crop, Uttar Pradesh’s sugarcane farmers are suffering

It seems Bajaj Hindusthan Sugar, one of India’s largest sugar producing companies, would rather invest in its sister concerns than settle the farmers’ dues.

ByPrateek Goyal
Not paid for last year’s crop, Uttar Pradesh’s sugarcane farmers are suffering
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It’s nearly 10 months since Anil Kumar, 52, sold his sugarcane crop to one of India’s largest sugar producing companies. He’s yet to be paid, despite several visits to the company’s local office in Pilibhit, Uttar Pradesh.

Since Anil, who lives in Hameerpur village, has no other source of income, he was forced to mortgage his wife’s jewellery. Now with even that gone, the farmer is unsure how to sustain his family.

Anil is one of around 12 lakh farmers in Uttar Pradesh who have not been paid for their produce for months by Bajaj Hindusthan Sugar Ltd, which in 2018-19 accounted for 15.25% of the state’s sugar production and 5.54% of the country’s. In all, the BHSL produced 1.83 million metric tonnes of sugar in 2018-19.

The Sugarcane Act of 1934 requires mills to pay the farmers for their produce without delay. If they fail to clear payments within 15 days, the mills are liable to pay interest at the rate of 12 percent per annum. Still, the BHSL hasn’t honoured its commitments. Not for lack of cash, though, it seems.

As on March 31, 2019, the BHSL had taken “long term borrowings” of Rs 5,382 for its sugar mills, only to hand over Rs 2,146.58 crore in loans to its sister concerns and others. According to the BHSL’s balance sheets, the company has given an unsecured loan of Rs 870.60 crore to Bajaj Power Generation on which interest amounting to Rs 708.83 crore is due. The BHSL seems unlikely to recover the loan, given the Bajaj Power’s purchase agreement with the Uttar Pradesh government was cancelled in 2017. Similarly, the BHSL has extended a loan of Rs 318.47 crore to one Ojas Industries Pvt Ltd, Rs 24.4 crore to Bajaj Aviation, Rs 11.92 crore to Bajaj Hindusthan Singapore Pvt Ltd. In all, the BHSL has diverted around 40% of the loans it has taken to its sister concerns.

“I delivered my crop to the BHSL last March and was supposed to get Rs 1.5 lakh. But I have not received my payment yet,” said Anil, who sold 50 tonnes of sugarcane to the company. “For them it may not be a big amount, but for us, it means survival of my family and farming. I have mortgaged my wife’s ornaments to keep my family going and now people have started asking me to return their money. I don’t know what to do if I do not get the payment soon.”

Having failed to get the BHSL to pay him for his produce for around a year, Sanjiv Shukla, a farmer from Jugrajpur village in Pilibhit, took the company to the Allahabad High Court in November 2019. “I and four other farmers from my village approached the high court on November 13, and the same day the BHSL deposited the pending dues in our accounts. Their lawyer argued that they had made the payment to us but we countered that our petition was on behalf of all the farmers who had not been paid,” he said. “There are around 10-12 lakh farmers who have not been paid. The pending amount is around Rs 300 crore.”

Sanjiv pointed out that most of the affected farmers were suffering in silence rather than speaking out because they were scared. “They are afraid of taking their problems to government authorities or the media. In the past, sugar mills have threatened farmers that they won’t buy their sugarcane if they speak out. Sometimes the mills purposely reject produce brought by farmers to keep pressure on them. They act like they are doing a favour to us buying our stock,” he explained. “For a year now, farmers associated with the BHSL have been struggling. Most of us are heavily indebted. Even those who were relatively comfortable are now mortgaging their assets. You can only imagine what marginal farmers are going through.”

The farmers are hesitant to speak out because sugar mills pay them Rs 316.65 per quintal of sugarcane. In the open market, they would have to sell for only Rs 170-180. The rate fixed by the Uttar Pradesh government for the early variety of cane is Rs 325 if it’s sold at the sugar mill and Rs 316.65 – after deduction of transportation cost – if it’s sold at the mill’s purchase centre.

Sanjiv complained that while the BHSL wasn’t paying the farmers their dues, it was generously investing in other Bajaj group companies. “They have given over Rs 800 crore in loans to Bajaj Power Generation in Lalitpur, and Rs 300 crore to Ojas Industries,” he said. “This money could have been used to clear the dues of the farmers.”

One of Sanjiv’s co-petitioners, Lalata Prasad, from Jugrajpur village, sold his cane crop at the BHSL’s Golagokarannath plant, Lakhimpur Kheri, in March last year. “So far, they have paid only five farmers, after we moved the high court. They transferred Rs 55,000 into my account. There are lakhs of farmers who are still struggling to get their payments. Most of them are marginal farmers.”

The sugarcane season starts in November and ends in April. And to even sow the next crop, the farmers have had to borrow money. “Around 90 percent of the farmers associated with the BHSL have mortgaged family ornaments. We have taken loans from moneylenders,” said Lalata. “Most of us have been unable to pay back our bank loans and are getting notices. Many of us are unable to even pay the school fees of our children.”

It’s a story that’s repeated by nearly every farmer in Pilibhit and Lakhimpur Kheri. Manoj Verma, a resident of Madakurdkala village in Pilibhit, sold 25 tonnes of sugarcane to the BHSL in March 2019. He was paid Rs 9,000 and is still waiting for the remaining amount of around Rs 70,000. “I have two daughters in school. I have not been able to pay their fees for two months. My mother is not keeping well. She needed treatment but I was unable to take her to a good doctor in the city because I didn’t have money,” Manoj said. “I have taken loans from several people who are now asking me to pay them back. I don’t know if I can. In spite of having four acres of land I have become like a landless labourer. I have started working for daily wages of Rs 200 a day on the farms of other people.”

Pramod Singh of Gadah village in Pilibhit, too is waiting for his money since last March, when he sold around 90 tonnes of cane to the BHSL. “I am supposed to get around three lakh rupees. So far, they have only paid me Rs 1.5 lakh, in installments until December 2019. My family is suffering. The BHSL paid five farmers after they moved the high court. It seems we all may have to file individual petitions to get our money.”

Raj Kumar, a farmer in Jugrajpur village in Pilibhit, said the problem isn’t new. “All other sugar mills are paying the farmers on time, only the BHSL is holding back our money. They first started delaying our payments five years ago, but now it has reached a state where we are not being paid our dues for the previous year,” he said. “We haven’t received the money from last year and we don’t know what will happen this year.”

Records available with the corporate affairs ministry show the BHSL has incurred losses every year since 2012. Its share price fell steadily from Rs 447.42 in May 2006 to Rs 6.5 in December 2019. Yet, it has given out thousands of crores in unsecured loans to other companies in the Bajaj group.

Newslaundry contacted the office of the BHSL chairman and managing director Kushagra Bajaj for comment. Responding on his behalf, Swati Bhattcharya, a spokesperson for the company, said, “All payments to farmers for the year 2018-2019 have mostly already been made, the balance will be cleared in the next 15 days or so. The hearing for BHSL’s sugar promotion policy claim of around Rs 1,525 crore is scheduled to take place on February 10, which is due to BHSL after Hon’ble Supreme Court’s order. We will use this money for payment of farmer dues as soon as we receive it.”

She added, “We would like to reiterate the cyclical nature of the sugar business. With producers having to procure and process all the cane in a period of four-five months, while selling it over a period of 1 to 1.5 years, it’s unavoidable for the sugar industry to have cane dues at the end of the sugar season. These cane dues are paid from the funds raised from sugar sales after close of operation and continue for another year or more.”

Correction: A previous version of this article carried the logo of Bajaj Auto instead of Bajaj Hindusthan. The error is regretted.

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