The sugar industry in Uttar Pradesh (UP) on Tuesday openly criticised the cane pricing policy of the state government and filed a petition at the Lucknow bench of the Allahabad high court, requesting quashing of the minimum buying price set for mills in 2011-12 by the administration.
The industry, through its apex body, the Indian Sugar Mills Association (Isma), also demanded central government intervention in the form of export permits for three-four million tonnes of sugar, removal of the levy obligation to feed ration shops and a quick announcement of a final price for ethanol.
Attacking the Mayawati government, Uttar Pradesh Sugar Mills Association secretary Shyamlal Gupta said, “The state government wants to increase the price of sugarcane as much as it can, keeping in mind the elections (next year). There is no logic behind increasing the SAP (state advised price). It is a political decision. Mills cannot pay this kind of price”. The state government has announced a Rs 35-40 rise per quintal of sugarcane to Rs 235-250 per quintal for different varieties.
Said Gupta: “At an estimated under-recovery of Rs four-five per kg, the sugar industry in UP could lose almost Rs 3,000 crore in one season alone.” Considering an average cane price of Rs 240 per quintal, the cost of sugar production in UP works out to Rs 34 per kg.
To sustain payment of the higher cane price, the ex-mill price needs to improve to at least Rs 34 a kg and the retail price to Rs 37-38 per kg, at least in North India, he said. The present ex-mill price in UP is around Rs 29 per kg.
Gupta also said if the price did not improve, sugar from Maharashtra mills would flood North Indian markets.
Isma director-general Abinash Verma said, “If the ex-mill price does not improve or the government keeps the prices down artificially through its powers to release the monthly sugar quota that each mill is required to sell every month, it is feared that cane price arrears may build up sooner than expected.”
The anticipated loss of around Rs 3,000 crore would put more burden on mills and lead to mounting of cane price arrears or defaults in bank loan payments. In turn, leading to reduction in cultivation of cane next season, Verma said. UP is estimated to produce 6.6 million tonnes of sugar this season. So far, 25 mills have started crushing cane.