Sugar mills in Uttar Pradesh to suspend cane crushing

Say they are losing Rs 5.5/kg on sugar post hike in cane prices

The over 95-odd private sugar mills in Uttar Pradesh have decided to suspend their operations from the 2014-15 crushing season that will start from October unless the state government links the sugarcane price to the price of the end product as suggested by a Committee headed by former advisor to Prime Minister C Rangarajan and stop coercive against the mill owners.

The millers alleged that due to faulty pricing formula adopted by the state governments they are losing around Rs 5.50 for every kilogram of sugar sold.

In a press conference today almost all the leading lights of over Rs 30,000 crore Uttar Pradesh’s sugar sector alleged that the Akhilesh Yadav lead state government has backtracked on almost all the promises made to them last year, when they had suspended operations due to high state sugarcane price, because of which they are being forced to submit closure notices to the state governments.

“The repair and maintenance work would be stopped henceforth and staff withdrawn. Individual mills would also be submitting their notices to the state government hereafter,” a statement said

The conference was attended by Kushagra Bajaj, Joint Managing Director of Bajaj Hindustan Ltd, Vivek Saraogi, Managing Director of Balrampur Chini Mills, Goutam Morarka of Dwarikesh Sugar, Balram Adhlkha from Uttam Sugar, Ajit Sriram of DCM Sriram, Tarun Sawhney, vice chairman and managing director of Triveni Engineering and Industries Ltd among others.

In India, the Centre fixes a Fair and Remunerative Price (FRP) for sugarcane, but state governments are free to determine on their own what price they want sugar mills in their state to pay to the farmers.

Uttar Pradesh which is India’s second biggest sugar producing state after Maharashtra had fixed a cane rate in 2013-14 seasons which is almost Rs 50 per quintal more than the Centre-determined price for the year.

This price millers said is unplayable as sugar prices in the domestic and international markets have fallen leading to mounting losses. As per rough calculation, millers will have sugarcane arrears estimated to be over Rs 5,000 crore by the end of the 2013-14 sugar season that will end in September.

“To stop this problem from recurring, the UP government should immediately link sugarcane price to sugar prices for the 2014-15 season,” Vivek Saraogi, Managing Director of Balrampur Chini Mills said.

He said the notion that sugar mills in UP are against the interest of the farmers is completely wrong as the mills have been having a cordial relationship with almost 4 million farmers of the state for last several decades.

“In the last 4 years, the UP government has raised the sugarcane SAP by almost 70%, while sugar prices have increased by just 7-10%, which is why we are unable to pay the farmers,” Abinash Verma, director general of Indian Sugar Mills Association (ISMA) said.

C B Patodia of the Association’s UP unit said that sugar factories in the state had started crushing operations last year based on the assurance made by the state government which included constitution of a committee to recommend a rational cane pricing formula by April 2013, financial assistance of Rs 9 per quintal of cane and an above all a stay on all sort of coercive action by the government on mills. However, the millers alleged that nothing has moved forward on the assurances.

Meanwhile, in a related development, representatives of cooperative sugar mills is also believed to have met the food minister Ramvilas Paswan recently and a meeting has also been called of the private and cooperative sugar millers next week.

Sugar production of India, the world's second largest producer and biggest consumer, is expected at 24.2 million tonnes as against the annual domestic demand of 23 million tonnes. The closing stock of sugar at the end of the season is seen at 7.5 million tonnes. EoM

• Around 4 million farmers directly dependent on UP sugar mills in the state
• UP sugar industry produces 30 pc of country’s sugar
• 96 sugar mills in the private sector contribute for 92% of sugar
• Sugar Industry in UP is worth over Rs 30,000 crore
• Sugar mills supply 35 crore litres of ethanol and 3200 MW of power to the state grid