Saddled with Rs 5,000 crore arrears, UP sugar mills seek relief

Virendra Singh Rawat

Lucknow / Dec 1, 2020

Saddled with farmers arrests worth about Rs 5,000 crore for the last crushing season 2019-20, the private sugar mills have written to Uttar Pradesh chief minister Yogi Adityanath seeking urgent relief, including subsidy, for the current season 2020-21.

In a letter, UP Sugar Mills Association (UPSMA) president C B Patodia has urged the CM to maintain the cane price at last year’s level in the backdrop of lower sugar recovery vis-à-vis last crushing season.

Besides, the Association, representing private units, has demanded a subsidy of Rs 15 per quintal (100 kg) to compensate for the expected increase in cost of production due to lower recovery by 0.5 to 0.8 per cent compared to 2019-20, apart from allowing payment of sugarcane price in 2-3 installments to “reduce the burden of the working capital.”

Interestingly, the UP farmers have sought 25 per cent hike in the state advised price (SAP) of cane for current season 2020-21 citing higher farm input costs.

Last year, the Yogi government had kept the SAP unchanged at Rs 315 per quintal for the common variety of the cash crop. The prices for the early and rejected varieties of cane were held at Rs 325 and Rs 305 per quintal respectively.

Interestingly, the state has not increased the SAP since 2018-19 in view of the market glut and the fall in the domestic and international sugar prices.

In August 2020, the Centre had fixed the cane Fair and Remunerative Price (FRP) for 2020-21 at Rs 285 per quintal at a recovery of 10 per cent. FRP is the minimum cane price to be paid by the sugar mills for the procurement of the crop. However, some states fix a higher floor price, SAP, for cane to incentivise growers.

The UP government has begun the process of determining SAP for the season. A committee headed by UP additional chief secretary, sugarcane, Sanjay Bhoosreddy had earlier chaired a meeting with the representatives of farmers, sugar industry and experts. Now, the committee will submit its report to the panel headed by the chief secretary, which will later give its recommendation to the cabinet.

According to the UPSMA, the sugar sector was facing the cash flow challenges owing to the market glut and higher cost of production compared to the prevailing prices of sugar. This scenario is expected to continue in 2020-21 as well owing to the surplus production in Maharashtra by 4 million tonnes (MT) and reduced consumption due to the ongoing Covid-19 pandemic due to closure of restaurants, reduced sale of sweets, beverages etc.

Besides, the export policy for 2020-21 has been delayed due to which exports will be lower this year, it said adding “the ethanol blending program is a welcome move, but it will not ease the sugar surplus situation in the short term.”