NAGPUR, Jan 29: Every sugar co-operative in Vidarbha is to get a special loan of Rs two crore this season from the state co-operative bank. Ajit Pawar, chairman of the Maharashtra State Co-operative Bank, told reporters here on Thursday.

The loans will help co-operatives extend crop loans to more cane farmers. Pawar said the co-operative bank is concerned over the shrinking area in Vidarbha under cane cultivation. As a result of this there just isn't enough cane production in the region to sustain the co-operative sugar mills.

By making more funds available to the co-operative mills it will be possible for the farmers to get bigger crop loans and thus expand the area of cultivation.

He said the decision to grant special loans had been taken after extensive discussions with officer-bearers of the co-operatives and president of the state federation of co-operative sugar mills, Jayantrao Patil.

Patil was also present at the press conference. The 13 mills in Vidarbhawhich are usually able to undertake crushing operations need about 40 lakh tonnes of cane to fully utilise their installed crushing capacity. After three mills currently under construction become operational, the total crushing capacity in Vidarbha will go up to 52 lakh tonne.

As against this, the stocks available now are only between 12 and 13 lakh tonnes. To fully satisfy the requirements of the mills, it is estimated that cane would have to be cultivated in an area of at least 2.5 lakh acres. Currently the area under cane cultivation in Vidarbha is 66 thousand acres

It is hoped that the new loans will help expand this area and boost production. Besides the shrinking of cane cultivation area, some other reasons for the ill-health of sugar co-operatives in Vidarbha are political tension between office-bearers of the co-operatives and those of the district co-operative banks, financial indiscipline, low quality seeds and inexperienced harvesting labourers.

Marathwada region faced a similar situationsome years back. However, Pawar pointed out, Marathwada made express efforts to bring their sugar co-operatives on par with those in western Maharashtra.

Currently the procedure is that the state co-operative bank makes loans available to respective district central co-operative banks who in turn pass on the loans to co-operatives institutions. Pawar said the office-bearers of some co-operatives had demanded that the funds be given directly to them bypassing the district banks.

This demand could not be fulfilled because it would require the State Government to give special permission to bypass the district bank and such a move would be struck down by NABARD in any case.

Three mills -- Ram Ganesh Gadkari, Ambadevi and Shiv Shakti -- have not been able to take their loans so far this season owing to various problems. Pawar said a decision has been taken by the state co-operative bank to extend the time limit for them to June 30, 1999.

Ram Ganesh Gadkari Co-operative Sugar factory is facing problemsafter a private company engaged to instal equipment, left the work midway. The Ambadevi factory is facing a similar fate with the closing down of the company that was installing its equipment. The state's sugar commissioner is scheduled to inspect the situation at these two factories soon, Pawar informed.

Of the 16 mills in Vidarbha only nine are expected to undertake crushing operations this season. Four mills -- Shriram, Shetkari, Balaji and Wainganga -- are closed for want of sugarcane to crush. These four were closed last season too.

Pawar also informed that the repayment arrears of sugar mills in Vidarbha due to financial institutions add up to Rs 218 crore.

He listed out individual defaulters and amounts outstanding till December 31, 1998, as follows:

Mahatma -- Rs 38.87 lakh, Jai Kisan -- Rs 12.30 crore, Shankar -- Rs 7.60 crore, Akola Zilla Sahakari -- Rs 20.40 crore, Shriram -- Rs 5.20 crore, Shetkari -- Rs 5.48 crore, Wainganga -- Rs 3.42 crore, Bapurao Deshmukh -- Rs 20.17 crore,Pushpavati -- Rs 15.40 crore, Kondeshwar -- Rs 23.60 crore and Jijamata -- Rs 4.77 crore.