UP sugar mills demand abolition of molasses quota for distilleries

Ahead of the next sugarcane crushing season in Uttar Pradesh, with their factories holding nearly 13 million tonnes (MT) of molasses inventory, private millers have urged the Uttar Pradesh government to abolish the system of reserving molasses for state distilleries producing county liquor.

In a letter to the state government, the millers have strongly opposed reservation of molasses, claiming it is a vital byproduct and the revenue generated by it contributes towards sugarcane payments to farmers.

Molasses is a cane byproduct generated during sugar production. Its recovery is pegged at about 4.75 per cent of crushed cane. Molasses is processed to make ethyl alcohol, which is not for human consumption, and methyl alcohol, which is used for making liquor by distilleries and has medicinal uses too.

Earlier this month, the Yogi Adityanath government had hiked the molasses quota from 12.5 per to 16 per cent for country liquor, in the backdrop of shortfall in production of the byproduct from an estimated 5.5 MT to around 4.8 MT during 2018-19.

In his letter, UP Sugar Mills Association (UPSMA) secretary general Deepak Guptara noted that due to the reservation and restriction on molasses, the market prices get suppressed, affecting optimum realisation for mills. He said the projection of ample production of molasses in UP, going forward, negated any possibility of shortage.

Pointing out that realisation from free sale of molasses in the market was considered while fixing the state cane price, he suggested that the policy of reservation was unjustified even as he also referred to an Allahabad High Court order, which had ruled the state was not vested with power to reserve molasses.

While, total production of molasses in UP, the country’s top sugar producer, staood at about 48 MT in the 2018-19 season, together with the molasses’ opening balance of 9.4 MT, the total availability of the byproduct totalled almost 57 MT. Of this stock, molasses availability for country liquor was more than 7.8 MT, while till July 31, 2019, nearly 2.9 MT reserved for country liquor stood un-lifted.

Guptara lamented that during 2018-19, molasses was sold by mills at an average price of Rs 40 per quintal (100 kg) to distilleries, which subsequently increased to Rs 75 per quintal after recent hike in prices, even as the free molasses sales price in the market was ruling around Rs 550 per quintal.

“This translates into Rs 350 crore subsidy provided by the sugar industry and farmers to country liquor manufacturers. Till July 31, 2019, around 2.9 MT of molasses is lying un-lifted with sugar mills from the reserved category,” the letter stated.

He underscored that the state will have high cane crushing for 2019-20, while there was already unsold stock of 13.3 MT in UP.

The private millers also taken recourse to the Centre's ethanol blended programme (EBP), saying UP being the highest cane producer, there was greater expectation from the state for enhanced contribution to EBP.