UP sugar industry demands removal of levy

Uttar Pradesh sugar industry today demanded sweeping reforms in the sugar sector, including abolition of sugar levy and linking sugarcane and sugar prices.

The industry is of the opinion that the government should directly bear the cost of providing subsidised sugar to poor rather than making the industry shoulder the burden.

Sugar levy is a percentage of sugar produced by mills, which is procured by government at below market prices for subsidised distribution under public distribution system (PDS).

The industry representatives aired their grievances in a meeting with Commission for Agricultural Costs and Prices (CACP) chairman Ashok Gulati here, in the presence of UP cane commissioner Kamran Rizvi as well as farmers’ representatives.

“The provision of sugar levy hampers the paying capacity of mills and cane farmers are the ultimate losers,” Dalmia Group official Naresh Paliwal told Business Standard here.

Another important suggestion forwarded by industry was to remove the large gap between Fair and Remunerative Price (FRP) and State Advised Price (SAP). While, FRP is announced by Centre each year for sugarcane, state governments announce SAP to provide added benefit to their farmers.

During 2010-11, SAP in UP stood at Rs 205-210/quintal, which was hiked by Rs 40/quintal over previous crushing season, against the FRP of Rs 139/quintal.

Meanwhile, Gulati suggested the state to improve its cane acreage and recovery percentage. He note there was a lot of potential to harness sugarcane cultivation in eastern UP and Bihar due to conducive environmental conditions and abundant water supply.

He further asked mills to diversify into other byproducts of sugar for increasing their profitability and in turn improving farm income.

UP cane commissioner said the state government wanted to increase recovery rate, but it did not favour increasing cane acreage beyond a point as it could lead to glut situation and cause financial losses to farmers.

The industry referred to the delay in procurement of ethanol from their premises by the government, which added to their inventory costs. They also lamented that ethanol prices had not been revised.

Meanwhile, farmers advocacy body Kisan Jagriti Manch president Sudhir Panwar opposed the deregulation of sugar sector, unless necessary structural and policy changes had been made to protect the farmers’ interests.

He noted that the issue of deregulation has been raised after a year and industry was lobbying to make it through this time due to favourable sugar production statistics and positive attitude in the government.

“The sugarcane farmers are important stakeholders, but they are out of discussions. There are several vital points, including levy quota obligations, sugar release mechanism and de-reservation of cane area, that need to be addressed before the government takes any final decision in this regard,” he added.