| The setting up of a committee to prepare a roadmap for the cash-strapped sugar industry is unlikely to bring any cheer to it. While the farmers will start bringing their sugarcane to the mills for crushing next month onwards, the committee’s report will only come some time next year.
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| “The purpose behind setting up the committee is to provide a solution to the problems of overproduction and high cane prices tormenting the sugar industry,” said a government official.
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| The committee, headed by former finance secretary Vijay Kelkar, has Commission for Agricultural Costs and Prices chairman T Haque and International Food Policy Research Institute director Ashok Gulati as its members. It is scheduled to have its first meeting later this month and is expected to submit its report in six months.
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| The sugar industry is facing its worst crisis ever where mills are not even able to recover the cost of raw material. This year’s production, at about 28 million tonnes, is 45 per cent high over last year’s 19.2 million tonnes.
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| Consequently, sugar prices have crashed and most companies have seen a loss in the past two quarters. Mills have not been able to pay the cane prices to farmers.
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| In Uttar Pradesh, for instance, mills owe Rs 1,500 crore to farmers. And the worst is still to come. Prices are expected to fall further with yet another record production, projected at over 29 million tonnes for the fiscal 2007-08. Annual domestic demand hovers around 20 million tonnes.
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| “By the time the committee submits its report and the government takes a decision on its recommendations, the crushing period of the 2007-08 season may come to an end. Even if it has some positive recommendations for the industry, it may not have any impact on us in the coming season,” said a top executive of a sugar company.
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| The state governments which announce their own sugarcane price will be doing so in October for the next season. The mills will have to make payments based on these prices as and when they start crushing.
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| Some companies have even taken the matter to the courts, seeking relief from high sugarcane prices set by the Uttar Pradesh government. |
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