Uttar Pradesh government today kept the minimum sugar cane price unchanged at Rs 280 a quintal for 2013-14, refusing to give in to demands for a lower cane price by cash-starved millers who have threatened not to start crushing operations.
The state government has not hiked the state advisory price (SAP) of cane but the industry considers the prevailing price as high and "unviable" to ensure crushing operations this year.
It was anticipated that the state government would hike prices as a sop for farmers ahead of 2014 Lok Sabha polls.
The industry feels that mills cannot pay SAP -- the minimum rate at which mills buy cane from farmers -- more than Rs 225 per quintal this year as sugar prices are lower.
Faced with a cash crunch, more than 60 private sugar mills in Uttar Pradesh, including Bajaj Hindusthan and Balrampur Chini, yesterday announced they would not start crushing operations in the 2013-14 marketing year until viable sugarcane prices are set by the state government.
In contrast to the industry's demand for lower SAP, the Opposition parties lashed out at the UP government saying that the SAP was "inadequate" for covering farmers' cost.
According to a government spokesperson, the UP government has fixed the SAP of 280/quintal for common variety, while Rs 290 for early maturing variety and Rs 275 for inferior cane.
Prices have been fixed keeping in mind that the cane rates should be beneficial to farmers while maintaining the continuity of the sugar industry, he said.
The decision to keep SAP unchanged at last year's level comes in the backdrop of huge financial losses to the tune of Rs 3,000 crore incurred by UP millers in 2012-13, which led to cane arrear of Rs 2,400 crore towards farmers.
Besides keeping SAP unchanged, the UP government has exempted mills from paying a purchase tax of Rs 2 per quintal so as to give relief to mills facing cash crunch.
With the fixing of minimum prices, nearly Rs 22,500 crore is estimated to be paid to farmers in 2013-14, he added.
To provide relief to the Rs 80,000 crore sugar industry, Agriculture Minister Sharad Pawar said the Centre is considering measures including interest free loans to mills and a final decision in this regard shall be taken in the next 8-10 days.
