UP sugar mills get warning

Last Updated: Mon, Oct 28, 2013 21:30 hrs

The struggling sugar industry in Uttar Pradesh got another jolt with officials of private sugar mills in Bijnor district being detained by the district administration over sugarcane payment arrears.

The millers have labelled the development as “coercive measures from the state government”. The industry has declined so far to give their cane reserve area requirement and the cane commissioner is likely to start the process on last year’s reservation by each mill. While state mills have begun crushing, private mills have not; they want the state government to first decide on the cane price payable to farmers, which they’ve said is already far too high.

In Bijnor, anticipating arrests, several officials of mills in the area were said to have given resignations. A sugar industry official said most of these were in charge of repair and maintenance. “The next one month is crucial for getting the units ready for the season. But the strong-arm tactics being adopted by the district administration has stopped the maintenance activities in these factories,” he said.

Last year, the government raised the floor cane price (state advised price or SAP) to Rs 295 a quintal from Rs 255 a quintal in the previous year. The price, the industry contended, was lower than their average cost of production, and a supply glut led to massive cane payments arrears. The industry says the average cost of manufacturing sugar is of Rs 35 a kg and their average realisation is Rs 31 a kg. The spot price is now reported to have fallen to a five-year low of Rs 29 a kg.

“It looks difficult to commence crushing this season. We are expecting the state government to announce a cut in cane prices this season to make sugar manufacturing affordable,” said Sanjay Tapriya, chief financial officer of Simbhaoli Sugars Ltd.

Rahul Bhatnagar, principal secretary, sugar industry and cane development, told Business Standard on the Bijnor action: “The district magistrate can assess the situation and act accordingly. The sugarcane department has nothing to do with it.”

UP sugar millers want linking of the cane price to sugar prices. UP accounts for 30 per cent of India’s sugar output and supports a little over four million farmers’ families. The private mills have to clear arrears of Rs 2,400 crore for the 2012-13 crushing season, even as the current season has arrived.

“The cane commissioner would start issuing cane reservation orders in due course. At present, we have to consider the maturity of sugarcane. Due to late rains this year, the cane crop is not mature enough for optimal recovery,” said the secretary. A committee has been formed for ascertaining the cane price for this season. The committee would forward its recommendation to the government for vetting, before being sent to cabinet for approval.

Last year, the crushing had started after November 15, while the cane price was declared on December 7.

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