Candy for cooperatives, sweet nothings for private mills

Former poised for crushing; latter remain in gridlock with state

Even as the stalemate between the Uttar Pradesh government and private sugar mills over sugarcane prices and dues continues, 23 cooperative units have cleared theirs and are readying for the crushing season.

The repair of the cooperative mills is likely to be over by October-end.

“From November, we would be ready to start the operations, whenever the state gives its green signal,” UP Cooperative Sugar Factories Federation Limited Managing Director B K Yadav told Business Standard.

Cooperative mills account for 10 per cent of the crushing in UP. They have a capacity of 60,000 tonnes crushed a day (TCD) against 515,000 of the 100-odd private ones.

A defunct cooperative unit at Powayan in Shahjahanpur district, with 1,250-TCD capacity, has been outsourced to a private company for running. “This unit would be ready for crushing by November-end. This way, 24 cooperative units would participate in crushing.”

The cooperative units have cleared Rs 1,925 crore of their cane dues for 2012-13. The Akhilesh Yadav government had to provide budgetary support of Rs 475 crore to them for settling those.

Meanwhile, the private mills stand firm on their demand of a bailout before they even talk about operations.

The private units are weighed by dues of Rs 2,400 crore (of the last crushing season). The subdued retail sugar prices compared to previous year's and uncertainty on cane prices for 2013-14 have pushed them to the edge.

UP Sugar Mills Association has been vocal about the crisis. The mills have given representations to the government seeking relief.

“It remains a wait-and-watch situation for us. We are facing an extremely difficult situation in UP. Under the prevailing circumstances, we would be producing sugar at over Rs 35 a kg and selling it at Rs 29 kg. No industry can survive in such a situation,” a leading sugar company's executive said on condition of anonymity.

In the recent sugarcane reservation meetings, the state farmers’ leaders had even demanded raising the state cane price to Rs 350 a quintal against Rs 280 a year ago due to the rise in input costs.

The private mills want the government to subsidise them over any cane price above Rs 240 a quintal. UP accounts for 30 per cent of India’s sugar output.