Agitated over the non-payment of sugarcane price arrears, thousands of farmers have laid siege to a mill owned by Bajaj Hindusthan Ltd, the country's largest sugar producer, at Kinauni near Meerut.

Trapped inside the mill premises since June 1 are about 35 employees of the company with their families. Farmers have barred anyone from entering the mill. A confrontation of this magnitude has never occurred in the area, local residents said.

The mill had stopped crushing sugarcane to produce sugar in mid April. But its distillery, biogas plant and the recently-inaugurated medium density particle board unit were functional. These too have come to a halt as the angry farmers have switched off the power unit. About 40,000 farmers supply sugarcane to this mill.

No sugar has been allowed to leave the factory for the marketplace in the past eight days. The mill sells 600 to 700 tonnes of sugar a day. At current market prices, this would have brought daily revenues of about Rs 84,00,000 to Bajaj Hindusthan.

Record sugar production in 2006-07, which caused a crash in prices, saw sugar mills in Uttar Pradesh run up arrears amounting to thousands of crores to sugarcane farmers. Being the largest player, Bajaj Hindusthan owed the most. The company has ramped up its production capacity at a blistering pace in the last few years to become the country's top sugar company.

"The mill owes Rs 9 crore (Rs 90 million) to the farmers for the 2006-07 season (October-September) and another Rs 10.35 crore for the current season. The agitation will continue indefinitely," said Nitin Tyagi, chairman of the local Maliyana Cane Union, a union with members who supply sugarcane to the mill.

Mamchand Singh, the head of the Farmers' Protest Committee constituted to act against the mill, added that while the Supreme Court had directed the mills to pay Rs 118 a quintal (100 kg), only for those quantities for which payments had not been made till then, Kinauni re-adjusted all prices to Rs 118.

For the 2007-08 season, the court has set a price of Rs 110 per quintal. "We want a price of Rs 125 to 130 a quintal for both seasons," Singh added.

"We have fully complied with the Court orders for both seasons and have paid accordingly. For the 2006-07 season, we have no arrears. An amount of Rs 75 crore is due for the current season and it will be cleared in next 7-15 days," said a Bajaj Hindusthan spokesperson.

Unable to control the infuriated mob of farmers, the district administration has posted a handful of policemen at the mill. The farmers have burnt an effigy of Shishir Bajaj, the chairman of Bajaj Hindusthan.

Farmers and their leaders told Business Standard that if their grievances were not addressed soon, they would march to Bajaj Bhavan at Noida's Jamnalal Bajaj Marg, the company's swanky corporate office, which was set up a few years ago.

"We are not going to supply sugarcane to this mill in the future. We are also in talks with the farmers who supply sugarcane to the other units of the Bajaj group and we will ask them to halt supplies to all the mills next season onwards. The government will have to find an alternative buyer for us," said Singh. The company runs 14 sugar mills in the state.

Interestingly, the farmers have not allowed political parties to gain mileage from the situation. All the farmers concerned have made contributions to sustain the agitation.