Economy

UP sugar millers threaten to suspend cane crushing

Our Bureaus New Delhi/Bangalore | Updated on March 13, 2018

BL06-AGRI-SUGARMILL-LEAD   -  Bloomberg

A supervisor at a sugar mill in UP monitoring cane arrivals at the factory-gate. — Kamal Narang   -  Business Line

Seek linkage of cane price to that of sweetener

As the cauldron of communal trouble in Uttar Pradesh reaches boiling point, more trouble seems to be brewing for the Akhilesh Yadav Government, with private sugar mills threatening to suspend cane crushing from October.

“We have given a notice of suspension of crushing operations for the next sugar season (beginning October) and have requested the State Government to quickly finalise the linkage formula (suggested by the Rangarajan Committee) by which the sugarcane price will be automatically determined in relation to the revenue realised from sugar and its primary by-products,” CB Patodia, Chairman, UP Sugar Mills Association (UPSMA), said at a press conference here on Tuesday.

UPSMA represents 96 sugar factories, such as Simbhaoli Sugars, Balrampur Chini, Bajaj Hindusthan among others.

“The repair and maintenance work would be stopped henceforth and staff withdrawn. Individual mills will also be submitting their notices to the State Government hereafter,” Patodia added.

Counter questions

Terming the UP millers’ threat as a “clear act of blackmailing”, VM Singh, Convenor of Rashtriya Kisan Mazdoor Sangathan, which has been fighting for the cause of sugarcane farmers in the State, said, “It is only a ploy to get more money and nothing else.”

Further, if they have been facing losses, how come the number of factories in the State have increased from 35 to 99 in the past 10 years, Singh asked.

Putting the ball in the State Government’s court, private mill owners, who said arrears to farmers could mount to ₹10,000 crore this season onward, claimed they were facing the “worst financial condition ever” and were not in a position to pay farmers and labourers unless the UP Government announced the ‘promised’ financial assistance and stopped all coercive actions.

“Our credit ratings are falling and banks have stopped lending to us. Several sugar companies have either fallen sick or are on the verge of falling sick,” said Abinash Verma, DG, Indian Sugar Mills Association (ISMA).

Incidentally, the Uttar Pradesh Government has issued notices to 52 sugar mills for not paying arrears to cane farmers and has also lodged about 60 FIRs against individual promoters, senior managements etc. Warrants are also said to have been issued in some cases.

On Tuesday, the mill owners also sought import duty of at least 40 per cent and export subsidies to raise cash flows, at least for two-three years, so that arrears to farmers can be paid. “The mounting arrears are causing cracks our in 7relations with farmers,” said Tarun Sawhney of the Triveni Group.

Total arrears

As on July 31, the outstanding cane payments to farmers stood at ₹9,252 crore, of which millers in UP alone owed a maximum of ₹5,741.74 crore, followed by Karnataka mills at ₹1,794.68 crore and Tamil Nadu mills at ₹504.40 crore, the Parliament was informed on Tuesday.

To help clear their arrears, the Centre had notified a scheme to extend interest-free loan up to ₹6,600 crore in January this year. Under this scheme, the banks have sanctioned ₹5,914 crore till July 18, Minister of State for Food and Consumer Affairs Raosaheb Patil Danve said in a written reply to Lok Sabha.

UPSMA said the cost of sugar production in UP was an average ₹37/kg, the highest in the country, while the price realisation at the mill gate was ₹31.5/kg, leading to losses of ₹5.50/kg.

It said the SAP in UP was ‘high’ at ₹280/quintal, compared with about ₹225/quintal in Maharashtra and Karnataka, which had adopted the Rangarajan formula of ‘linkage pricing’.

Sugar production for the marketing year 2014-15 is projected to rise by four per cent to 25.3 million tonnes, ahead of annual domestic consumption of around 23 million tonnes. Sugar stocks at the end of the current 2013-14 season ending September are estimated to be around 7.5 million tonnes.

Published on August 05, 2014

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