UP sugar industry presses panic button

Demands Rs 2,000 crore interest-free loan; sector supports 4 million families in the state

Uttar Pradesh sugar industry today pushed the panic button saying its very survival was at stake in the state, which produces roughly 30 per cent of India's sugar output.

Industry asserted sugar mills were posting huge losses in UP following higher cost of production due to high cane price vis-à-vis lower sugar prices, which was pushing them towards sickness.

It has demanded interest free loan of Rs 2,000 crore from the state government for clearing the sugarcane arrears of about Rs 3,500 crore for 2012-13 crushing season.

"The situation has now become alarming for the mills with their cash flow position under strain due to mounting losses," Indian Sugar Mills Association (ISMA) director general Abinash Verma said here.

He lamented the state advised price (SAP) of cane in UP had increased from Rs 165/quintal in 2009-10 to Rs 280/quintal in 2012-13, while the corresponding hike in sugar price had been from Rs 28/kg (2009-10) to Rs 31/kg in 2012-13.

"Thus cane price in UP has gone up by 70 per cent in the last 3 years compared to an increase of only 11 per cent in sugar price in the same period," he added.

With sugarcane supporting 4 million farmers' families in UP, there is a possibility of further increase in the sugarcane price in an election year with Lok Sabha poll due in the first half of 2014 calendar.

While, Verma claimed the sugar mills could only manage to pay at last year's SAP level, UP Sugar Mills Association (UPSMA) - affiliated to ISMA - members said in private even that level would be unviable given lower sugar retail price at present compared to last year, when SAP was fixed.

Meanwhile, UPSMA urged the Akhilesh Yadav government to speedily implement the Rangarajan Committee recommendations for rationalising the cane pricing mechanism in the state. A delegation met the state chief secretary in this regard.

Karnataka and Maharashtra, which together account for about 55 per cent of the country's sugar output, had implemented these recommendations.

UP is the country's largest and second largest sugarcane and sugar producing state respectively. During 2012-13, the cane acreage and production were estimated at 24.24 lakh hectares and 1,430 lakh tonnes respectively in the state.

The 121 mills in UP produced nearly 7.47 MT of the sweetener - 7 per cent higher compared to last year's sugar output at 6.97 MT.