Concerned over the farmers’ backlash with sugar mills not buying standing sugarcane crops and in order to resolve the issue of sugarcane pricing, the UP government has announced tax waiver on entry tax and purchase tax for cash-starved sugar mills in order to soften the high procurement price. Meanwhile, the government has also warned sugar millers to start crushing by December 4 or face legal action.
Recently, 99 private mills out of the state's 122 sugar mills in Uttar Pradesh (UP), the country’s second largest producer region, had refused to operate due to the high cane price of Rs 280 per quintal fixed by the state for 2013-14 marketing year (October-September). The sugar mills want cane prices below Rs 225 per quintal. On the other hand the government has said that Rs 280 per quintal to be paid to farmers was not negotiable and thus announced tax sops to ease the cost of sugar mills. The state government has also decided to set up a committee to look into all aspects related to fixing of sugarcane prices, including linkage of cane price with sugar prices. The state government will fix state advisory price (SAP) of cane from 2014-15 marketing year onwards.
At present, domestic sugar industry is facing financial problems owing to the increase in cost of production and sharp fall in domestic sugar prices on account of surplus supplies. The country's sugar production is likely to drop by nearly three percent to 24.4 million tonnes, but sufficient to meet the present domestic demand at about 22 million tonnes. Furthermore, the Food Ministry will soon seek Cabinet nod for providing interest-free loans to cash-starved sugar mills to help them meet working capital requirements. The ministry wants to pay the interest accrued on loans from the sugar development fund, which is around Rs 12,000 crore.
