UP acknowledges stress in state's sugar sector

In the backdrop of sugarcane arrears for 2012-13 crushing stand at Rs 2,850 crore in Uttar Pradesh (UP), the state government has for the first time acknowledged stress in the sugar sector.

UP additional cane commissioner N P Singh said the government acknowledges the sector was passing through difficult times and more measures were needed to make the industry sustainable.

The sugar millers had already asserted they were posting huge losses in UP, following higher production cost due to high cane price vis-à-vis lower sugar prices, which was pushing them towards sickness.

UP produces about 30 per cent of India’s sugar output. However, sugar recovery in the state was much lower compared with Maharashtra, the largest sugar producer.

Every crushing season, UP government announces State Advised Price (SAP) for sugarcane, 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 laments that while SAP in UP had increased from Rs 165 a quintal in 2009-10 to Rs 280 a quintal in 2012-13, the corresponding increase in sugar price had only been from Rs 28 a kg (2009-10) to Rs 31 a kg in 2012-13. Thus, cane price in UP soared 70 per cent in the past three years, compared with an increase of 11 per cent in sugar price, which had squeezed their margins.

The Indian Sugar Mills Association had demanded interest free loan of Rs 2,000 crore from the Akhilesh Yadav government for settling the arrears. Of the Rs 2,850 crore arrears, about Rs 2,680 crore pertains to the private mills, while the rest is pending on the cooperatives’ mills.

Singh was speaking at ‘Sugar Tech 2013 – Improving Recoveries in Sugar Industry – Opportunities & Challenges’ organised by the Confederation of Indian Industry here. He said research should focus on varieties for higher yield and higher sugar content.

During 2012-13, the 121 mills in UP had produced about 7.47 million tonnes (mt) of the sweetener — seven per cent higher compared with last year’s sugar output at 6.97 mt.

The Indian Institute of Sugarcane Research Director S Solomon said UP’s sugar recovery percentage stood at nine per cent over the past two years, compared with India average of 10.25 per cent.

He suggested increasing area under high yielding varieties to 30-40 per cent, faster cane supply to mills, popularising varieties released by the Centre and seed programmes, etc.