Groaning under the burden of huge arrears to sugarcane farmers and rising losses, leading sugar producers of Uttar Pradesh have begun filing cases against a December 2006 directive of the state government on sugarcane prices.

Sugar mills in the state purchased sugarcane worth Rs 11,000 crore during the 2006-07 (October-September) season. Of this, only Rs 9,500 crore (Rs 95 billion) has been paid to the farmers. The mills have been asked to clear all arrears by August 31.

Bajaj Hindusthan, the country's largest sugar producer, has filed a writ petition in the Allahabad High Court challenging the order on the state administered price for the 2006-07 (October-September) season. A similar case has been filed by Uttam Sugar.

The SAP of sugarcane in the country's second largest sugar-producing state went up to Rs 125-130 per quintal in 2006-07 from Rs 95-100 per quintal in 2000-01.

The SAP is different from the statutory minimum price fixed by the Centre.