The Uttar Pradesh sugar mills are not keen to get their raw sugar processed by mills in other states. A number of them find it more suitable to sell the imported sugar to other mills while some want to wait for Chief Minister Mayawati to lift the ban.
This is likely to defeat the purpose with which the government last week relaxed excise rules to facilitate the processing of raw sugar contracted by one mill in another factory.
“It does not make sense to get it processed by mills in other states and sell it there. This is for two reasons. First, there is no clarity about the percentage loss that another mill would claim, though it is generally around 5 per cent. Second, if we process and sell the sugar in Maharashtra, the realisation would be Rs 3,800 a quintal. If we bring the same sugar to UP, incurring an additional freight of Rs 30 a quintal, our realisation would be Rs 4,100 a quintal,” said a leading UP miller.
In early November last year, the state government had banned the import of raw sugar into the state, saying the decision would ensure farmers get better sugarcane prices. This has fuelled a spike in sugar prices and caused ex-mill sugar prices in the state to touch a record of Rs 4,300 a quintal (though it has now softened to Rs 4,100).
About 900,000 tonnes of raw sugar imported by UP mills is stuck at various ports due to the ban by the state government. A series of requests by Food and Agriculture Minister Sharad Pawar to lift the embargo failed to yield results. This forced the union government to relax excise norms and allow the UP sugar mills to get their raw sugar processed in other states.
The central government has allowed duty-free import of raw sugar to tide over the domestic production shortfall. In the 2008-09 season ended September 2009, domestic sugar output fell 42 per cent to 15 million tonnes, causing retail sugar prices to more than double. At present, sugar is selling at Rs 45-46 a kg in the retail market. Annual sugar consumption is estimated at 23 million tonnes. Sugar also has a high weight of 3.62 per cent in the wholesale price index.
UP is the country’s second-biggest sugar producer, after Maharashtra, and home to top producers like Bajaj Hindusthan and Balrampur Chini. UP-based companies like Bajaj Hindusthan, Simbhaoli, and Dhampur, contracted import of raw sugar, mainly from Brazil under the duty-free scheme.
