Stung by the Uttar Pradesh government’s decision to raise sugarcane floor prices to the highest in the country, the state’s mills are contemplating legal action. ?A meeting of the Uttar Pradesh Sugar Millers Association (UPSMA) is scheduled on Thursday to discuss the course of action and we are thinking of taking legal assistance. Millers cannot pay these exorbitant prices when sugar prices are static,? said a UPSMA official.
On Tuesday, UP chief minister Mayawati announced a state advised price (SAP) of R240 for a quintal of sugarcane for the ongoing crushing season. This is R35 more than the SAP for the previous season and R95 more than the fair and remunerative price (FRP) of R145 set by the Centre. Sugar millers say that as per the new SAP, the state’s sugar mills will have to sell every kilogram of sugar at a loss of R4.
Millers say the BSP government’s decision is political and anti-industry. ?Domestic sugar prices are not rising in tandem with the rise in cane prices. How will we make payments?? wondered another miller. He said at current SAP, sugar will cost roughly R33 per kg ex-mill. ?If sugar is made at R33, it needs to sell at R36-37/kg. It will be suicidal for the industry to fill the gap of R4. If the government wants to please farmers, it can do so by paying the difference rather than forcing the industry to do so,? said another miller, adding the SAP hike has exposed the government’s anti-industry position.
?UP has only one big industry worth its name and that is sugar. But every year, the industry is put to test by decisions which have political roots. At this rate, it would be tough for the industry to survive for long,? warned another miller. ?While it is good that the government is farmer-friendly, this decision has established that it is industry-hostile, and the sugar industry is being gradually squeezed out of the state. If giving better returns to farmers is a political compulsion, the government can at least bail out the industry by waiving purchase tax and society commission,? he added.
?Unless sugar prices touch R36/kg, the current SAP is non-viable and will lead to cane arrears,? said another miller, adding pricing is more political and socialist than practical.
?Due to this decision, we may be forced to default on payments to farmers. The government is actually forcing the sector to become non-viable and is working contrary to its claims that it is farmer-friendly,? he said.
Another angry miller said the government does not take into consideration the findings of its own research bodies, making them practically redundant. ?Even if we go by the figures provided by the state directorate of sugarcane development, the cost comes to R212. What then is the logic of declaring R240 as cane price? And who will foot this gap? The industry made huge losses last year and this year’s SAP will ensure that whatever is left is squeezed dry,? he stated.