The Hindu Business Line : Mills stumped by SC ruling on cane pricing

SUGAR mills are nonplussed by the Supreme Court's order, which states that State Governments have the power to peg the price of sugarcane higher than the Statutory Minimum Price (SMP) fixed by the Centre. The industry sees this as a "retrograde development".

The Supreme Court's decision was in the context of a petition filed by the Uttar Pradesh Government challenging the Allahabad High Court order of December 11, 1996, which said State Governments had no right to fix a State Advised Price (SAP) for sugarcane.

In their initial reaction to reports of the judgement, sugar millers said the Supreme Court's decision had set the industry back by a few years. The order was bound to impact the sugarcane price fixation policy across the country.

The private sector sugar mills had opposed State Governments' involvement in sugarcane pricing and had taken the issue to court.

Most State Governments had also given up announcing a SAP over the SMP fixed by the Centre. For instance, in Tamil Nadu, the last time SAP was announced was for the 2000-2001 season. The private mills had also challenged in court the issue of the SAP announced for 1998-99, 1999-2000 and 2000-01.

The SAP fixed then had been applicable to the mills in the co-operative sector while the private mills had stayed out of the purview of the SAP. Sugar millers are now wondering if the decision meant that they would have to pay the arrears of sugar prices for the three years. This would mean that each private mill in the State could owe the farmers anywhere between Rs 20 crore and Rs 50 crore, according to industry estimates.

Sugarcane pricing has been the bone of contention between the Governments — both Union and State — and the private sugar mills. The mills in Tamil Nadu had also opposed the SMP fixed for the 2002-03 season by the Centre stating that the hike was not in tandem with the sugar prices. The industry has maintained that sugarcane pricing has been biased in favour of the farmer.

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