With the ex-mill price of sugar in Uttar Pradesh (UP) falling this month from last season’s average, industry officials feel that recurrent issue of outstanding payments to cane farmers may worsen if the State Government does not adopt a rational cane pricing policy.
The ex-mill price of sugar for October, as per industry estimates, stood at ₹2,850/quintal, compared with last season’s average of ₹3,023.
“The ex-mill realisation is about 5-7 per cent lower than last year. If the cane price is set at last season’s State Advised Price (SAP) of ₹280/quintal or is raised and sugar price is lower than the previous season, our paying capacity will be affected and there will be arrears again,” said Abinash Verma, Director-General, Indian Sugar Mills Association (ISMA). Earlier this week, the UP Cane Commissioner said that private mills had assured that crushing would begin in November. Asked if operations will begin on time, Verma said, “The industry is clear that there will be no crushing till the Rangarajan Committee-suggested linkage formula is announced. A statement was provided on the same and may have been misinterpreted. Maintenance operations have just begun in all 95 private mills so crushing can only start in December.”
The Centre has suggested a Fair and Remunerative Price (FRP) at ₹220/quintal, far lower than the SAP. The Rangarajan Committee linkage formula, based on revenue-sharing, determines cane prices at 70 per cent of revenue generated by sugar and by-product sales or 75 per cent from sugar alone, with 5 per cent weightage given to by-products. Maharashtra and Karnataka have already implemented this formula.
A sugar industry official said law and order problem could arise if mills did not begin crushing.
“Farmers will be on the roads in 10-15 days and gherao factories. The Government thinks that operations will start after a violent backlash. That doesn’t solve the problem of arrears, they’re not trying to find a permanent solution,” he said. The official questioned why the State administration didn’t defend farmers who were selling cane to jaggery (gur) manufacturers at lower prices.
Gur units“Gur makers get between 25 and 35 per cent of total cane supply at about ₹180/quintal, at times lower. The Government should remember that 47 per cent of cane went to the sugar industry last season. The other 53 per cent was sold at prices far less than what we pay. Why not help those farmers?”
Outstanding payments to farmers for the 2013-14 season stand at about ₹2,300 crore from around ₹7,500 crore in March. UP is the second-largest sugar producer after Maharashtra and is estimated to produce 6.23 million tonnes this season, which began on October 1.