UP sugar mills seek govt help as cane arrears pile up

Written by Deepa Jainani | Lucknow | Updated: Jul 24 2013, 16:59pm hrs
Sugar mill owners in Uttar Pradesh have told the state that they can't pay even last year's cane price of Rs 280 per quintal unless the government gives a relief of Rs 40 per qtl to the industry or pays this amount to the sugarcane growers directly.

The move comes amid industry's fears that the government may announce a steep hike in the sugar cane price for the next season to woo the farmers before the upcoming Lok Sabha elections.

In a letter to the cane commissioner, the UP Sugar Millers Association has written that the cane price paying capacity of the factories in Uttar Pradesh for 2013-14 is estimated to be at a maximum of Rs 240 per qtl only. Looking at the precarious condition that the sugar industry is in the current year, the factories would be able to pay either the FRP fixed by the Centre for 2013-14, or at best the previous years cane price of Rs 280 per qtl with a subsidy of Rs 40/- per qtl to meet the shortfall, the letter states.

Not only that, the sugar millers have also filed their submission of the cane requirement for the next year with a rider that if the cane price is fixed higher than Rs 280 per quintal of last year, the mills will be free to revise their requirement accordingly. In the event of fixing higher cane price, which the mills will not be able to pay, they would need to reassess their estimated requirement because the responsibility to run the mill and crush the entire cane, does not include any undertaking to incur losses, which are clearly predictable in the event of a higher cane price, Shyam Lal Gupta, secretary, UPSMA, has written.

The letter also states that in case the sugar prices improve in the next year to a desired level and are higher than the breakeven cost of the factories, they will pay the additional cane price to the farmers, which may be worked out on the basis of the formula recommended by Dr Rangarajan committee.

It may be mentioned that the Karnataka government has already adopted the recommendations of the Rangarajan committee and have formed a board to fix the cane price on the basis of a revenue-sharing formula recommended by the panel. The Maharashtra government, too, has proposed to bring in a new law on the same lines for the purchase and supply of sugarcane in the state from the next season. We would request UP to also consider such a forward-looking move, the letter stated, adding that the sugar millers would like to be assured that only a fair and reasonable cane price will be fixed for the next season, taking into consideration the cane price paying capacity of the factories and the huge losses incurred by them, especially in the current year.