Sugar body wants 2007-08 SAP quashed

Having gained partial relief by taking the legal route against high sugarcane prices, the Uttar Pradesh Sugar Mills' Association (UPSMA) is keen to get the 2007-08 state advised price (SAP) order quashed.

The association is planning to file an application at the Lucknow Bench of Allahabad High Court for the same before the next hearing, scheduled for January 7.

"There is no relevance in the 2007-08 SAP order since it was simply a replication of the previous year's order (that now stands quashed) without taking into account our paying capacity and low sugar prices. Pending a new price, the mills should be allowed to pay central government announced statutory minimum price (SMP) to farmers," said industry sources.

The SMP for the current season is Rs 81.18 a quintal (linked to 9 per cent recovery with a premium of Rs 0.90 for every 0.1 per cent increase in recovery).

Millers claim that they are incurring losses even at the interim price of Rs 110 a quintal. "The cane price at the millgate is now Rs 115 a quintal. At 10 per cent recovery, the cane cost in producing one quintal of sugar will be Rs 1,150. With the conversion cost of Rs 400 a quintal, the total cost in producing each quintal of sugar will be around Rs 1,550. However, the sugar realisation is lower at Rs 1,300-1,350 a quintal," they added.

On November 15, the Court's Lucknow Bench had fixed an interim cane price of Rs 110 a quintal against the state advised price (SAP) of Rs 125-130 a quintal declared by the state government.

The decision came after the writ petition filed by a number of mills, challenging the state's mechanism behind fixing the SAP. The matter has been posted for further hearing on January 7.

The Allahabad High Court, on December 19, had quashed the 2006-07 SAP order and directed the state government to form a committee for calculating a new SAP.

The committee will have to decide the SAP within a period of three months after consultations with the representatives of sugar factories, cane growers, the Commission for Agricultural Costs & Prices (CACP), cost accounting branches of the State and Union Governments and the National Sugar Institute, Kanpur.