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Editorial: Sugar shows some steel

Sep 07 2013, 02:30 IST
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SummaryUP millers tell the state govt that enough is enough

While successive governments in Uttar Pradesh have continued to play politics with sugarcane mills, the mills have done well to finally unite to tell the government off. In the past, despite the huge losses this caused sugarcane mills, Uttar Pradesh had the highest ‘state advised price’ (SAP) for sugarcane that mills mandatorily had to buy from farmers. While the higher prices were fixed in order to attract farm votes, the loss-making mills could not possibly make the payments—which is why, at one point, arrears to farmers had crossed R7,500 crore. If it wasn’t bad enough that the mills were mostly loss-making, in an attempt to boost its pro-farmer image, the state started registering FIRs against mill officials as well as owners, even arresting some. How disastrous UP’s policy has been can be judged by simply putting together some basic statistics on the industry across the country—UP has the highest SAP, it has the highest farmer arrears and the sugar mills in the state have the highest losses.

It is in this context that the UP Sugar Mills Association has written, as our page 1 story today points out, to the government saying its members will not be able to tell the government how much cane it wants unless the price fixed is a fair one. And since this may not stop the government from still fixing a high price given that elections are in the air, the mill-owners have said that, were the government to do so, the mills are not going to be able to crush all the cane. Detailed annexures have been added, including 4 quarters of loss data for mills, in case government officials are oblivious of the facts. If this doesn’t make the government see sense, perhaps the fact that banks are no longer willing to bankroll a bust business model will—unless, with its new-found clout, the UP government is able to get the Centre to arm-twist the banks into cooperating.

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