Meanwhile, the government and sugar mill owners are wrangling over financing arrangements for the payments.

Industry and government officials said some offices at the Finance, Economy and Agriculture ministries were still partly in control of the cane growers.

"Who knows how long they will stay on occupying the ministries, now it's already been more than a week since they launched this protest at the Agriculture Ministry," said an official at the National Sugar and Alcohol Chamber.

"Almost all the mills are affected by this," he added.

Mexican cane growers, idle after the harvest, have established a yearly tradition of blockading and protesting at government buildings when they are due to get their final payment from mill owners for the completed harvest.

At the same time, debt-troubled sugar mills have become dependent on the government to renew financing and credit programs to meet the payments.

It is also the time of year when growers prepare to enter negotiations on how much they will be paid for next year's cane, which is based on the market price of sugar. If they can push up the domestic price, they will be able to obtain a higher base price.

Government Says Mill Owners Responsible For Payment

An extension of a financing package via the Mexican government export development bank Bancomext was approved late last month, but a number of key details such as the volume of credit available have not been released yet.

The government said this week that payment to cane growers was the responsibility of mills, but that the mills had to apply for the available financing.

Industry estimates of the amount of financing which will be made available vary from about $130 million to $250 million. The mills' debt to cane growers has been estimated at anywhere between $300 million and $485 million.

"We only know of the $120 million to $130 million figure being available, but the interest rates are too high so the mills want better terms before applying for the credit," said an official with one of the sugar mill groups.

"Also, the details have not been made very clear, and in any case it's not enough to cover the payments to the cane growers which are at least $300 million," said the official.

Agriculture Minister Javier Usabiaga told a local radio station Wednesday that Mexico's 60 mills owe a total of $460 million to the cane growers for the 2000-2001 harvest, and urged them to start paying.

Export Fraud Charges Add To Industry

The dispute over the financing package and cane payments comes on top of another local sugar scandal, involving the country's largest sugar group, Consorcio Azucarero Escorpion, also known as Caze.

Senior Caze and government trade officials have been accused in local media of falsifying sugar export reports, pocketing the export subsidies and dumping sugar destined for export on the local market, thereby pushing down the domestic price.

Industry insiders say this isn't news, and that Caze has for years avoided shipping its government-set export quota to the poorly paid world market at the expense of the smaller groups.

"Caze has never been known to comply with its export quotas and you always wonder" how they get away with it, said a high-level industry source.

Caze has denied any wrongdoing. In a statement Wednesday, the company said it had fully complied with government requirements, and submitted the relevant paperwork to government trade authorities and to the sugar financing fund.

Traders said, however, that it was the first time the media has attacked Caze so aggressively.

-By Maja Wallengren, Dow Jones Newswires; 525-726-9152, mwallengren@hotmail.com