UP sugar impasse ends as mills get sops, but no change in SAP

Dec 02 2013, 00:42 IST
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State’s sugar mills agreed to start the crushing of cane for this marketing year State’s sugar mills agreed to start the crushing of cane for this marketing year
SummaryState’s sugar mills agreed to start the crushing of cane for this marketing year

Ending the impasse in the Uttar Pradesh sugar industry due to a government-industry stand-off, the state’s sugar mills on Sunday agreed to start the crushing of cane for this marketing year after the government allowed them to pay farmers in two tranches for cane purchases and also offered some other incentives, although the mills still have to pay R280 per quintal for cane as fixed by the state earlier.

After a meeting of millers with ruling Samajwadi Party chief Mulayam Singh Yadav, chief minister Akhilesh Yadav and chief secretary Jawed Usmani earlier on Sunday, a deal was hammered out under which mills will pay R260 per quintal in the first tranche within 14 days of cane purchases, and the rest later this marketing year through September 30, 2014. The state government also announced a waiver of entry tax, purchase tax and society commission, which together account for R11 per quintal or 3.9% of cane value, recognising the difficulties faced by mills due to subdued sugar prices in recent months, according to a statement by the chief secretary.

However, while a release by the UP Sugar Mills’ Association said that “the state government has assured that a long-term viable cane price fixation formula would be worked out so as to ensure long-term viability and growth of the industry”.

An end to the practice of fixing of high state-advised price (SAP) and reserving molasses for the alcohol industry are prerequisites for the sugar industry, which accounts for roughly 25% of India’s output, to be viable.

However, Sunday’s development marks an end to the stalemate over elevated pricing of the raw material that has delayed the crushing by almost a month and witnessed a violent stir and also the suicide of a farmer allegedly over the delay in crushing. The sugar mills, which had repeatedly expressed their inability to pay more than Rs 225 per quintal for cane, said they agreed to start crushing "in the interest of lakhs of farmers".

Conceding that the sugar prices are going through an unprecedented slump, Usmani said: "The government has accepted the industry’s demand and has agreed to grant them concessions under three heads for the season 2013-14: Waiver of entry tax on sugar, which stands at Rs 2.73/quintal, waiver of purchase tax, which is Rs 2.00/quintal of cane and society commission of Rs 6.30/quintal, which will be borne by the state government. As a result, the state

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