UP sugar mills to move SC on interim price order

Even as the private sugar mills in Uttar Pradesh are about to begin crushing at the interim price of Rs 110 per quintal fixed by the Allahabad

High Court last week, the Uttar Pradesh Sugar Mills' Association (UPSMA) is planning to appeal to the Supreme Court against the High Court Order.

"Since the Order passed by the Lucknow High Court directs mills to begin crushing at a price of Rs 110 per quintal, we have to honour and begin crushing. However, since mills would continue to make losses even at Rs 110 per quintal, the association will be going to the Supreme Court once the written Order is available", said C B Patodia, president, UPSMA and advisor to the Birla Group of Sugar Companies. Our intent is to get a link between sugar and sugarcane prices, he added.

On November 15, the Allahabad High Court had fixed an interim cane price of Rs 110 per quintal against the state advised price (SAP) of Rs 125-130 per 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 December 19.

The Court has also issued a notice to the state government on November 15, asking it to justify the process of arriving at the SAP, which was far higher than the statutory minimum price (SMP) announced by the Centre.

Industry sources added that even if they begin running the mills, they will not be in a position to make hundred per cent payment of cane price to farmers since they will continue to incur loss.

"The cane price at the millgate will be Rs 115 per quintal taking into account the transportation charge. 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 per quintal, the total cost in producing each quintal of sugar will be around Rs 1,550. However, the sugar realisation is projected much lower at Rs 1,200 per quintal and mills would lose at least Rs 300 per quintal", they added.

Most mills in the state have accumulated arrears in the last crushing season (October-September) as cane prices remained much higher than the realisation on sugar, resulting in losses and nonpayment to farmers.