Moreover, they are not able to liquidate their excessive stock to clear the dues, for which they blame the central government’s discriminatory sales quota policy.
An all-time high sugar production of 126 lakh tonne — which is 45% of the country’s total output — should have been a badge of honour for Uttar Pradesh sugar mills. But having saddled with the record arrears of cane dues to the tune of Rs 14,000 crore, the mills are in an unenviable position. Moreover, they are not able to liquidate their excessive stock to clear the dues, for which they blame the central government’s discriminatory sales quota policy.
The mills have repeatedly apprised the state as well as the Centre regarding the quota for sale of sugar not being in sync with its production. In a letter to the state government recently, the UP Millers Association has alleged inequity and pointed out that UP has produced 126 lakh tonne sugar as against Maharashtra’s 616 lakh tonne.
“It becomes obvious that sugar sales quota of UP should be double of Maharashtra, keeping in view the higher stock availability in UP,” it said, adding that this has not been adhered to by the department of food and public distribution, thereby causing serious problems towards cane price obligations as well as storage of sugar.
Making a comparison, the letter stated that while in 2018-19 season Maharashtra was allocated a quota of 102.18 lakh tonne against the production of 107.20 lakh tonne, UP was allocated a quota of 98.94 lakh tonne against the production of 118.22 lakh tonne in the same year. Similarly, in the ongoing 2019-20 season, Maharashtra has been allocated a quota of 55.94 lakh tonne against a production of 61.61 lakh tonne, while UP has been allocated 70.59 lakh tone against a production of 122.32 lakh tonne.
Earlier in May, the UPSMA had also written to the secretary, food and public distribution, pointing out that the monthly quota allocation to the UP sugar mills has been consistently less in comparison to Maharashtra on the terms of sugar produced in the current year. “This has resulted in huge unsold inventory with the mills in the state,” it had written, adding that the department is yet to take cognizance that sugar mills in UP have been instrumental in export of sugar in a big way, and therefore, they should be encouraged to sell more sugar as compared to other states, in sync with the government policy.
The letter to the food ministry stated: “UP’s sugar production exceeds the sugar produced in Maharashtra and Karnataka combined. It is imperative that sugar stocks are liquidated in the same ratio as that of production.”
As a remedy, the UPSMA had requested that the monthly sales quota allocation should be made strictly as per production of sugar in the state and “in this respect, quota for sale by UP mills should be double that of the mills in Maharashtra… This way, mills in UP would not be discriminated against and it would also somewhat reduce the burden of the huge stock build up,” it said, adding that there will be a huge carry over stock of unsold sugar if the quota is not increased.
The unsold sugar could keep the sugar prices down in the next season on the one hand, and on the other, factories will have difficulty in storage of sugar to be produced next year.