Ahead of the new crushing season starting October, the beleaguered sugar industry has urged Uttar Pradesh, the country’s largest sugarcane producing State, to rationalise its cane pricing policy.
In effect, the millers want the Akilesh Yadav Government to fix a lower cane price this year linking it to the sugar price . However, the demand may be difficult to meet considering the forthcoming elections to the Lok Sabha.
UP declares its own State advised price for cane, which is typically higher than the fair and remunerative price announced by the Centre.
For 2012-13 season, UP fixed the price at Rs 280 a quintal for the general variety, the highest in the country.
As a result, millers in the State have been reeling under the impact of high cane price amidst a bearish trend in sugar prices on higher supplies.
“We are trying to debate it out and convince the UP Government on the need to link price of cane to that of sugar for 2013-14 as suggested by the Rangarajan Committee” said Abinash Verma, Director General of the Indian Sugar Mills Association.
The Rangarajan Committee on sugar decontrol had proposed that at time of cane supply, farmers be paid the fair and remunerative price as the minimum and subsequently on a half yearly basis, the State Government concerned would announce the ex-mill prices of sugar and its by-products and farmers would be entitled to a 70 per cent share in the value of sugar and by-products.
“The mills are not able to afford the high cane costs fixed on the non-economic consideration. With the ex-factory prices ruling at Rs 3,050 or Rs 3,100, the factories are not in a position to pay more than Rs 240. UP needs to rationalise sugar cane pricing policy,” Verma said.
Karnataka has already set up a sugar control board to decide the cane price on scientific basis adopting thr Rangarajan formula, while Maharashtra is actively considering it.
Maharashtra and Karnataka, which account for close to 45 per cent of the cane produced in the country, have already out-priced UP in terms of sugar prices as cost of production is lower due to a higher recovery.
The production cost in UP is higher by at least Rs 4-5 a kg when compared to these states due to higher cane price and lower recovery. Reeling under the impact of rising cane prices over the past three to four years, the sugar industry in UP is on the verge of closure.
“Any hike in cane price will continue to bleed the industry,” Verma said adding that the UP mills still owed Rs 2,400 crore to the farmers. In the past four years, the SAP in UP has seen an increase of around 70 per cent from Rs 165 in 2009-10 to Rs 280 in 2012-13.
Also, the industry has asked the State to increase the transport rebate provided for moving the cane from purchase centre to mill gate to Rs 20 from the current Rs 8.75 on rising diesel costs.
UP is the only State that announces prices for the rejected cane varieties that have a recovery rate of only 7-7.5 per cent. However, the difference in prices between the fair and rejected varieties is only Rs 5 per quintal.
“We have urged the Government to increase the price difference between fair and the rejected varieties to at least Rs 20 so that the farmers are discouraged to grow them” he added.
About 22 per cent of the cane produced in UP is of the rejected varieties.
vishwanath.kulkarni@thehindu.co.in