UP sugar mills refuse to pay SAP for last season

Private sugar mills in Uttar Pradesh have refused to pay the arrears of the last crushing season (2006-07) in accordance with the state advised price (SAP). The private sugar mills owe Rs 900 crore to the farmers for the sugarcane purchased in 2006-07.

The Allahabad High Court, in a recent order, had quashed the SAP for 2006-07, which was fixed by the state government at Rs 125 per quintal for the common variety and Rs 130 per quintal for the early variety.

The state cabinet secretary, Sashank Shekhar Singh, on December 20, had claimed that the private mills had agreed to the government's suggestion for paying the arrears in accordance with the SAP.

The UP Sugar Mills Association (UPSMA), however, contradicted the claim saying such proposal was presented before them by the state government but they had sough time to consider it. An UPSMA official said that even before they could deliberate on the proposal, the government announced they had agreed to the proposal.

Soon after the Allahabad High Court quashed the SAP for 2006-07, the state government had announced that it will challenge the order in the Supreme Court. Sources said the preparation was underway and a petition would soon be filed before the apex court.

In a meeting of the representatives of the private sugar mills convened by the cabinet secretary Sashank Shekhar Singh here today, the mill owners categorically stated that payment of the arrears in accordance with the SAP would amount to contempt of the court.

Sources said the private mill owners maintained that they paid the cane price for the 2006-07 seasons as per the SAP fixed by the government till the matter was sub-judice. But now that the situation had changed as the high court has quashed the SAP for 2006-07, they were no longer obliged to clear the arrears as per the SAP.

The Lucknow bench of the Allahabad High Court had stayed the SAP for the current crushing season 2007-08 announced by the state government, and had fixed an interim price of Rs 110 per quintal for all varieties of sugarcane.

However, the state government had rejected the opposition parties' demand for a hike in SAP for sugarcane for the current cane crushing season (2007-08). The SAP for sugarcane has been fixed at 2006-07 level of Rs 125 per quintal for the common variety and Rs 130 per quintal for the early variety.