)
With the spectre of a drought looming large, Uttar Pradesh’s sugar cane farmers are set to suffer in a possible showdown between private sugar mills and the state government over cane arrears and cane price for the coming season.
The mills have put the Akhilesh Yadav government on notice forewarning of suspending crushing operations in the coming 2014-15 season, if their long demands were not met within the stipulated timeframe.
The mills have asked the government to announce the subsidy of Rs 9 a quintal of cane by July 23, as promised last year, would be given to them against the cane price of the 2013-14 season.
Interestingly, the Allahabad High Court is slated to hear a case pertaining to cane arrears on July 24.
Besides, the mills want UP to adopt by July 31 the ‘linkage formula’, which would determine future cane price at 75 per cent of the revenue realised from sugar.
Since, over Rs 6,000 crore are pending on private mills as arrears and the state government had so far registered about 57 First Information Reports and issued recovery certificates against them, they want such "coercive" measures to stop.
A delegation of UP Sugar Mills Association (UPSMA) had met state chief secretary Alok Ranjan last week and submitted a letter, which said if their demands were not met, the mills would be constrained to formally serve a notice to the government to discontinue manufacturing operations and stop repair/maintenance activities of mills.
UP sugar sector is estimated at Rs 30,000 crore and represents the largest organised industry in the state. Sugarcane farming supports the livelihood of over 4 million farmers.
According to Indian Sugar Mills Association (ISMA), the UP cane acreage in 2014-15 is estimated to dip by 9 per cent, while sparse rainfall would only affect the quality of standing crop.
Sugar industry lamented that while sugar mills in states such as Karnataka, Maharashtra and Gujarat followed a revenue sharing system for cane pricing, UP had only dragged its feet so far, putting private mills in severe operating losses over successive seasons.
The higher cane price coupled with lower realisation resulted in the higher cost of sugar production in UP by Rs 700-800/quintal as compared to the three states. UP produced 30 per cent of country's sugar, it accounted for 60 per cent of total cane arrears due to unviable cane pricing.
While, UP sugar industry and cane development principal secretary Deepak Trivedi is currently on leave, the chief secretary could not be reached for comments.
During 2013-14, UP had retained the state cane price at Rs 280/quintal for common variety, while the mills claimed their paying capacity stood at around Rs 225/quintal and any price beyond it would result in arrears and losses to industry.
The deadlock ended in December 2013 when millers agreed to pay the cane price of Rs 280/quintal in two tranches of Rs 260 and Rs 20. The government also announced to waive entry tax, purchase tax and society commission on sugar/sugarcane for the season, which translated into a benefit of around Rs 11/quintal to millers.
The state also announced to set up a high-level committee to analyse the sugarcane price linkage issue, which is yet to submit its report.
The mills complained that they had started their mills last year on the assurances given by the state, which have not been honoured.
