Higher cane price upsets sugar mills

Cooperative sugar mills have criticised the government for raising statutory minimum price (SMP) for sugarcane to Rs 73 per quintal, disregarding the industry's inability to pay this price.

"The sugar industry is already burdened with huge cane prices arrears. The enhanced SMP will further swell the arrears", warned the National Federation of Cooperative Sugar Factories.

In a statement issued today, Federation managing director Vinay Kumar pointed out that the sugar industry had already suffered a loss of Rs 5,380 crore in 2002-03 because of huge disparity between cane price, sugar production cost and actual price realisation.

At an output level of 20.14 million tonnes during the year, the cost of production worked out at Rs 13,500 a tonne, against the price realisation of Rs 11,325 a tonne. This led to an average loss of around Rs 2,175 a tonne on sugar production.

Describing the new price to be unrelated to the market conditions, Kumar said this would cripple the sugar industry. If the government wanted to pursue farmer-friendly pricing policy, it should provide budgetary support to the industry to enable it to pay the prices beyond its payment capacity.

Many sugar producing countries were following this practice at times when the sugar industry's paying capacity declined owing to low sugar prices.

He said various incentives offered by the government, such as export subsidy, creation of sugar buffer and a financial assistance package of Rs 2563 crore, were yet to reach either factories or farmers.

The government might have to come out with more sops to facilitate payment of higher prices for sugarcane.