Agri Business

UP sugar mills seek status quo on cane SAP

TV Jayan New Delhi | Updated on November 24, 2020 Published on November 24, 2020

Mounting woes Farmers are yet to be paid ₹5,000 cr as arrears from the last season

Millers’ body says decline in recovery, rise in diesel, labour to increase cost

UP Sugar Mills Association (UPSMA) has appealed to the State government not to increase the State Administered Price (SAP) of sugarcane as recovery rate of this year’s sugarcane crop is relatively lower as compared to earlier.

The Uttar Pradesh government hiked SAP only once since it came to power in 2017 and currently normal varieties fetch ₹315 per quintal.

According to Deepak Guptara, secretary, UPSMA, Lower recovery is just one of the reasons. There are several other problems that mar sugar production in the State such as 40 per cent lower power tariff for cogeration power and increased diesel and labour cost of sugarcane transport. Besides, maximum selling price of sugar being ₹3,100 a quintal, mills are not even recovering the cost of production. As per the UP government’s own calculation, cost of sugar production is ₹3,450 per quintal, he said.

Low recovery

“As per the data gathered from sugar mills from various regions in the State, sugar recovery is lower nearly in the range of 0.5- 0.8 per cent. What is worrying is that the gap in daily recovery of this season as compared to the recovery in the last season could increase further,” Guptara said. This lower recovery, which he blamed on prevailing climatic conditions, could impact the cost of sugar production in the range of ₹ 125 to 200 per quintal, he said.

Similarly, the UP Electricity Regulatory Commission last year reduced the price of bagasse by nearly half from ₹2,000 a tonne to ₹1,050 a tonne. This resulted in power tariff of cogeneration coming down by nearly 40 per cent, making it unviable for most sugar mills. “It’s time that the government came out with a long term bagasse pricing policy, the UPSMA official said.

According to Guptara, nearly 40 per cent of the sugarcane crushed by the UP mills are delivered by farmers at designated centres and companies carry them to the mills. There is transport subsidy available for this from the government as this was helping farmers. “But the government hasn’t revised this since 2012 when diesel prices were at ₹40 a litre. Nowadays, mills pay nearly double the amount for a litre of diesel. This transport subsidy needs to be revised at the earliest,” he said.

Subsidy

In addition to keeping SAP at last year’s level, the Mills are also asking the government a subsidy of ₹15 per quintal to compensate them for the increase in cost of production due to lower recovery. Similarly they want the government to allow them to pay farmers sugarcane price in 2 to 3 installments to reduce the burden on working capital and to ensure uniform payment to all farmers.

The farmers are yet to be paid an arrears of ₹5,000 crore from the last season. However, Guptara argued that the mills themselves have to get a total of ₹3,700 crore from the Central and State governments towards export subsidy as well as payment towards power purchase.

Jitender Hudda, a sugarcane farmer from western UP, said the expenses of sugarcane farmers have also increased due to high input costs and many sugarcane farmers are on the verge of shifting to other crops which are more profitable. “The government and mills should realise that the very existence of these mills depends on sugarcane produced by farmers as they will not be able to import sugarcane from elsewhere,” Hudda added.

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Published on November 24, 2020
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