UP transport sop to hit Maharashtra sugar sector

The Uttar Pradesh government's transport subsidy to its sugar factories will hit the Maharshtra sugar industry's hopes of a recovery from a three-year shortage of sugarcane.

Beginning October, when sugar crushing season begins, UP government would give a transport subsidy to factories with a crushing capacity of 10,000 metric tonne or more.

This could force Maharashtra's sugar co-operatives to reduce sugar prices by at least Rs 150 to Rs 200 a quintal to compete with the UP sugar industry.

In fact, to gain access to markets in northern and eastern states, sugar mills from Maharashtra are already selling their produce at Rs 1,600 a quintal, whereas the ex-factory price in UP, on an average, is Rs 1,700.

In a good monsoon year, sugar production in India touches 200 lakh metric tonne but owing to drought in southern India and also Maharashtra, sugar production dipped to 140 lakh metric tonne in 2004-05.

Last year, the share of UP in the national production was around 50 lakh tonne and Maharashtra was just around 23 lakh tonne.

This year, however, owing to good monsoon production of sugar for the entire country is expected to touch 170 lakh tonne and the state's output is set to reach it's normal level, of around 40 to 45 lakh metric tonne.

The order, issued by the UP government in February this year, assures sugar mills having capacity of 10,000 metric tonne or a total investment of more than Rs 350 crore that the entire cost of transportation up to 600 km would be borne by the state if sugar was exported out of the state.

Shiv Sena MLC and industry expert Kanhyalal Gidwani said, "Out of the 110 running sugar mills more than half would be forced to close their operations because of the the state government's subsidy."

BITTER HARVEST

Uttar Pradesh government's subsidy makes sugar from the state cheaper

State units, which are already offering sugar at lower rates will face certain closure