A day after sugar millers in Uttar Pradesh threatened to suspend operations demanding a viable price for sugarcane, the Akhilesh Yadav Government kept the State Advised Price (SAP) unchanged at Rs 280 a quintal for 2013-14 season.

While maintaining the price at the last year’s level, it has waived the purchase tax of Rs 2/quintal. Millers, however, feel let down as their appeal for a lower rate was not considered and the waiver, they say, is insignificant.

Even farmers are not happy, as they had been expecting an increase in price with production costs moving up.

“The price announcement indicates that the pressure exerted by millers has been rather effective,” said Sudhir Panwar, President of Kisan Jagriti Manch, while pointing to the fact that cane growers’ realisations will come under pressure this year.

“This SAP is unviable and much beyond UP mills’ paying capacity of Rs 225/quintal. At these prices, it will be extremely difficult to convince banks to extend loans or ensure that mills start their cane crushing in 2013-14,” said Abinash Verma, Director-General of the Indian Sugar Mills Association (ISMA).

Verma said that cane arrears in UP would mount to Rs 12,000-13,000 crore by March-April 2014 with the State maintaining the SAP at Rs 280/quintal amidst drop in sugar realisations and a lower paying capacity of mills.

At the same SAP, cane arrears had touched Rs 7,800 crore during March-April 2013 when the average sugar price realisation was Rs 3,150/quintal. Also, the mills have additional dues of Rs 2,400 crore to clear this year. Farmers fear that their earnings would be hit.

According to the UP Government, the cost of cane production has increased by Rs 23 to Rs 251/quintal over last year’s Rs 228. “The farmers’ profit margin willalmost be halved to around 12 per cent from 23 per cent last year,” Panwar said.

When Punjab and Haryana could increase the price to Rs 300 and Rs 301/quintal, what is the rationale in UP keeping the price at Rs 280, asked V. M. Singh, Convenor of Rashtriya Kisan Mazdoor Sanghatan. He urged the UP Government to take over the mills and run them.

Meanwhile, the Centre is exploring options such as reducing the time period for re-export of imported sugar under advance licensing from the current 18 months to three months, besides increasing drawback on exports to bail out the crisis-ridden sugar industry.

Also, the sugar mills may be allowed to get loans to the extent of excise duty paid by them last year for which interest would be paid from the Sugar Development Fund.

>vishwanath.kulkarni@thehindu.co.in

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