Sugar mills in Uttar Pradesh are heading for a stand-off with the State Government on the issue of crushing sugarcane for the current season that began last month.

A day after Chief Minister Akhilesh Yadav issued a directive to start crushing from November 20, sugar millers said on Tuesday that “they are unable to start as banks have refused to lend in the absence of any clarity on cane pricing.”

“There is no money, we are not in a position to run the mills incurring further losses,” said Abinash Verma, Director-General of the Indian Sugar Mills Association (ISMA), the apex body of private sugar mills. “We are going to convey this to the Uttar Pradesh Government,” Verma said, adding that mills had already lost their money “very badly” in the last two years and total losses are close to Rs 4,000 crore.

Crushing season

Late on Monday, the Uttar Pradesh Chief Minister directed sugar mill owners in Saharanpur, Meerut and Moradabad divisions to begin crushing between November 20 and 25. Similarly, other mills in the State have been asked to start crushing by November 30 without further delay. Uttar Pradesh is the second largest producer of sugar after Maharashtra and accounts for close to a third of country’s sugar output of 25 million tonnes Crushing operations have been delayed as millers want the Government to declare State Advised Price for sugarcane, while expressing their inability to pay beyond Rs 240 a quintal, based on the current sugar prices. Last year, the State Government announced a SAP of Rs 280 a quintal, while farmers this year have been demanding Rs 320 a quintal.

“We have only one demand: Please link the sugarcane price to that of product price,” Verma said, adding that “if the State Government wants to announce a political cane price, let them bear the extra burden. The State can directly give the difference in price to farmers directly in the form of subsidy.”

The Uttar Pradesh Government earns close to Rs 18,000 crore through duty on molasses and liquor produced through molasses.

Meanwhile, indications are that the Uttar Pradesh Government will announce SAP higher than last year’s Rs 280 a quintal. Considering the rise in cost of labour and other inputs such as fertilisers, the State Government has pegged the cost of cane production at Rs 297 a quintal for the current year, said Sudhir Panwar of Kisan Jagriti Manch, a farmers’ organisation.

Taking cue from Karnataka, which recently reduced the purchase tax on cane for millers and removed value-added tax on sugar, while increasing the cane price by Rs 100 to Rs 2,500 a quintal, the Uttar Pradesh Government may also come out with some measures, Panwar said. It is expected that UP may announce the SAP by November-end or early December, he said.

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