UP asks Centre to hike sugar sale quota by 60% to 10 lakh tonne

By: | Published: June 27, 2018 2:23 AM

The total cane crushed during the season is 1,110.33 lakh tonne and sugar production stands at 120.50 lakh tonne. While the recovery stood at 10.85%, the yield touched an all-time high of 79.20 tonne per hectare.

In a letter written to Union food ministry, UP sugarcane commissioner Sanjay Bhoosreddy has asked for increasing the sugar sale quota. (Reuters)

Faced with a record sugar production and spiralling cane arrears, the Uttar Pradesh government has urged the Centre to increase the monthly sugar sale quota of state mills by 60% to 10 lakh tonne.
In a letter written to Union food ministry, UP sugarcane commissioner Sanjay Bhoosreddy has asked for increasing the sugar sale quota from 6 lakh tonne to 10 lakh tonne for June so that the financial liquidity of mills can improve and help in settling cane arrears.

Interestingly, even though UP’s sugar production stands at more than 120 lakh tonne as compared to about 107 lakh tonne in Maharashtra, the latter’s sale quota has been fixed at a much higher level.
Stating that the quota was fixed at 6 lakh MT since some mills had not updated the latest production figures, Bhoosreddy says that the state sale quota was capped on the basis of sugar production figures up to March 2018. “We have now requested the food ministry to increase our cap to 10 lakh MT.”
Uttar Pradesh Sugar Mills Association has also drawn the attention of Union food minister Ram Vilas Paswan to this. In a letter, UPSMA president has pointed out the inadequacies of the central government’s package for the sugar industry and said that the quantity that has been allowed for sale under the stockholding limit is just about 6.25 lakh tonne for the whole state of UP in the month of June.

“This is just about 65-70% of the monthly average sales of UP mills in last 3 months. In fact, UP had sold 6.76 lakh tonne of sugar during June 2017, even though last year UP had produced 88 lakh tonne whereas we have produced 120 lakh tonne of sugar this year,” the letter said, adding that if a similar monthly sale quota is considered as per the stockholding limit for UP, the total revenue from June to September period that will accrue from the sale of sugar to all mills in UP put together (assuming a price of around Rs 3,000 per quintal) will be Rs 7,500 crore.

“Out of this, around Rs 2,400 per quintal will have to go to the banks as repayment of working capital loans and after keeping aside Rs 200 per quintal for factory maintenance and administrative expenses (to enable us to start our sugar mills next season), the mills can give about Rs 400 per quintal to the farmers.

Calculating this for the total sale of 25 lakh tonne from June to September (as per quota given), the UP mills would be able to pay only Rs 1,000 crore of cane price arrears from the revenue realised from sugar in these 4 months,” the letter underlines, adding that restricting the sale of sugar for UP mills is clearly detrimental not only to the sugar mills but also to the sugarcane farmers of the largest sugarcane growing state in the country.

“Stockholding limit is, therefore, unfair and unreasonable and against the interests of the sugarcane farmers and sugar mills of UP. In fact, though the production in UP is much higher, the total quota for mills in Maharashtra for June is higher than that allocated to UP despite the fact that the cane arrears are also lower in Maharashtra,” it stated.

Meanwhile, UP’s long-drawn sugar season has finally came to a close, with the last sugar factory closing for the season on June 22. Crushing operations had started on October 27 last year, making this the longest-ever season.

The total cane crushed during the season is 1,110.33 lakh tonne and sugar production stands at 120.50 lakh tonne. While the recovery stood at 10.85%, the yield touched an all-time high of 79.20 tonne per hectare. So far, UP sugar mills have collectively paid Rs 22,964.15 crore while outstanding cane dues now stand at Rs 12,394 crore.

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