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  3. Sugar Mills in Uttar Pradesh suspend cane crushing; pull up state government for their false promises

Sugar Mills in Uttar Pradesh suspend cane crushing; pull up state government for their false promises

06 Aug 2014 Evaluate

Yet again in loggerheads with the state governments, 95-odd private sugar mills in Uttar Pradesh (UP) have decided to crush no sugarcane in the 2014-15 season, scheduled to start from October until the state government gives in to two of their demands, with the first being linking mandated price to the market price of sugar and the other being, stopping its ongoing coercive action against mills for not clearing past arrears to farmers for cane.

Linking the state-set price of cane to that for sugar was one recommendation in the October 2012 report of the committee headed by C Rangarajan, then the chairman of the Prime Minister’s Economic Advisory Council. As far as cane arrears to farmers were concerned, the mills clarified that there was no pay that could pay such hefty amount, especially since the floor price set for the cane by the state government was unrealistic. 

In India, the central government suggests a ‘Fair and Remunerative Price (FRP)’ each season for cane, however it’s up to the State governments to follow this and to compel mills to pay a higher price for cane. UP, the country’s second biggest sugar producing state (Maharashtra is first), had fixed a cane rate for the 2013-14 season which was almost Rs 50 a quintal more than the Centre’s FRP, even as the mills claimed that the sugar prices had fallen both in home and foreign markets, leading to mounting losses. Interestingly, the mills claim that while the UP governments in the past four years have raised the sugarcane SAP (State Advised Price) by almost 70%, sugar prices have increased by only 7% to 10%.

Further, the millers also stood pat at their decision after the promises made during the previous sugar season, went unfulfilled, which included constitution of a committee to recommend a rational cane pricing formula by April, financial assistance of Rs 9 a quintal of cane and, above all, a stay on all coercive action by the government on mills to compel payment of arrears.

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