UP sugar mills' pleas for fixing cane price fall on deaf ears

Govt announces cane reservation meetings' schedule

Sugar has never tasted so bitter in Uttar Pradesh. The beleaguered sugar industry is set to get another jolt, with the state government announcing cane reservation meetings starting September 16, ignoring the fervent pleas of private mills to first announce the cane price.

The sugar companies had urged the government to announce its State-Advised Price (SAP) for cane before the units can give their requirement for the coming crushing season. The industry is already reeling under cane payment arrears of about Rs 2,500 crore for the 2012-13 crushing season, due to higher input costs compared to sugar prices.

However, the government seems in no mood to accommodate the mills’ request and has announced the schedule of division-wise cane reservation meetings to be held here  between September 16 and 25.

Earlier, the bench here of the Allahabad High Court had expressed displeasure over the non-payment of cane dues despite its express order of July 4 passed on a public interest litigation suit.

Every crushing season, the UP government announces SAP, which is much higher than the Fair and Remunerative Price (FRP) of the Centre. The mills have to compulsorily pay SAP to farmers for procurement.

The industry says the SAP in UP increased from Rs 165 a quintal in 2009-10 to Rs 280 a quintal in 2012-13, while the corresponding increase in sugar had only been from Rs 28 a kg (2009-10) to Rs 31 a kg in 2012-13.

The industry claims it had suffered losses in UP to the tune of Rs 400 a quintal, which had got reflected in cane arrears. It had told the state government that it was not in a position to pay beyond Rs 240 a quintal this season.

The industry is even prepared not to run the mills in case the government failed to provide some respite.

The cane reservation meetings are held to allocate cane areas to individual mills for crushing, based on their demand. Under the law, if mills fail to provide their cane demands, the government has the power to allocate cane area based on last year’s demand.

Indian Sugar Mills Association (Isma) discussed the current situation at a meeting in New Delhi for charting the course of action.

Hearing the case on September 5, the HC had directed Rahul Bhatnagar, principal secretary (sugar industry and cane development), for an affidavit by September 17 on the steps taken towards the settlement of arrears.

The order was passed by a bench of judges Imtiyaz Murtaza and Devendra Kumar Upadhyaya. The case has been posted to October 3.

On July 4, the HC had directed the state to ensure the settlement of dues within six weeks, giving priority to flood- affected districts. At that time, the arrears stood at around Rs 4,000 crore, which came down to about Rs 3,000 crore at the end of six weeks.

About 10 days earlier, the government had issued recovery certificates against five units whose payment percentages figured among the lowest.

The UP industry produces nearly 30 per cent of India’s annual sugar output. The sector is embattling multiple challenges of massive sugarcane arrears, flat sugar prices, huge carryover stock in domestic market, bleak global sugar price forecast, and refusal of banks to extend loans, among others.

During the 2012-13 crushing season, the mills had purchased sugarcane worth Rs 22,462 crore.

The UP sugar economy is estimated to be around Rs 30,000 crore, including procurement of cane by mills; unorganised ‘khandsari’ (unpolished sugar) and gur (jaggery) units, and local sales.