Mills should pay more than fair price: Pawar

Having introduced a new uniform sugarcane price for the country, which relieves the sugar industry of paying any additional price to farmers, the government now expects the Uttar Pradesh (UP) millers to pay more than the new fair and remunerative price (FRP) since sugar realisation is high.

“FRP is just a guideline and mills cannot pay a price lower than this. However, we expect mills to pay more than FRP since sugar realisation is Rs 3,000 a quintal. At least 70 per cent of the price realisation should go to the farmers,” Union Agriculture Minister Sharad Pawar said at the Economic Editors’ Conference, adding that he has called a meeting of the UP millers association to discuss the issue. He mentioned that mills in Karnataka and Maharashtra are paying a price of Rs 180-200 a quintal, which is much higher to FRP.

The UP government declared a state advised price (SAP) of Rs 165-170 a quintal for the new sugar season (October-September). However, this was followed by a declaration of FRP of Rs 129.84 by the Union government for the same season. FRP is intended to provide reasonable margins to farmer and is uniformly applicable to all the states.

The Union government has also brought in a new order that requires state governments (which declare their own sugarcane price or SAP) to pay the difference over and above FRP. Pawar added that FRP was brought in to discourage states from fixing a high SAP.

In a letter to Prime Minister Manmohan Singh last week, UP chief minister Mayawati had asked the Centre to review the decision which requires state governments to pay the difference between FRP and SAP.

“The state’s right to fix SAP was recognized by the decision of the Supreme Court. The government of India did not take the state government into confidence before making all the amendments related to FRP. Thus, the interests of about 4 million cane growers of UP were completely ignored.

The FRP announced by the government has enraged the farmers considerably. FRP had indirectly ended the rights of the state government to fix SAP,” Mayawati has said in a letter to Singh. UP is the second largest sugar producing state of the country.

Also, the government is mulling extension of the dead line for import of duty-free white and raw sugar to bridge the 3-million-tonnes shortfall in domestic supplies, Pawar added.

“In 2009-10 we are expected to produce near about 16 million tonnes. Add to this a carryover stock of about 2 million tonnes. As far as I know, sugar mills have contracted about 4 million tonnes in imports,” Pawar said.

“Considering that our domestic demand is around 24-25 million tonnes, there should still be a shortfall of about 3 million tonnes sugar in the country,” he added.

Pawar said the government is looking at extending the current deadlines for duty-free import of raw and white sugar from March and November 2010, respectively, without any levy obligation.

“Of course we would need to import. Can you imagine the impact of 3 million tonnes sugar shortage in a country like ours? And why not import when international prices are also lower,” he said responding to a question.

The minister's statement came in the backdrop of ongoing protest by sugarcane farmers’ over raw sugar import in Uttar Pradesh.

The state government has issued an advisory to railway authorities asking them to halt movement of all raw sugar consignment in view of deteriorating law and order situation in the state and delay their arrivals by two weeks to coincide with start of crushing operations.