UP govt wants reciprocity from industry on sugarcane price

The Uttar Pradesh government wants the sugar industry to 'reciprocate' its move of not hiking the sugarcane price and quickly resume crushing operations.

"I interacted today with representatives of a number of companies. They will reconsider their decision in a day or two. The government did not raise sugarcane prices in spite of huge pressure from farmers. A relief in the form of Purchase Tax waiver was also announced. The industry should reciprocate by operating the mills so that farmers don't suffer," Uttar Pradesh Principal Secretary (Sugar Industries and Cane Development) told Business Today.

Last evening, the Uttar Pradesh Cabinet announced that the sugarcane price for the current year will remain unchanged at Rs 280 a quintal. It also said that mills will not be required to pay a Purchase Tax of Rs 2 on every quintal of sugarcane.

This is for the second time in recent state history that the sugarcane price has been kept unchanged. The last such instance was in 2007-08.

However, a prominent sugar industrialist from the state said that mills cannot operate at a price of Rs 280.

"Last year, the industry paid Rs 280 as sugarcane price and realised Rs 3,150 for a quintal of sugar. We ended the year with a loss of Rs 3,000 crore. This year, we are realising Rs 2,900 for every quintal of sugar. If we buy sugarcane at Rs 280, our losses will be Rs 5,000 crore," he said.

About two-third of private sugar mills in the state - including top companies such as Bajaj Hindusthan, Balrampur Chini and Triveni Engineering - made formal announcements his week that they are suspending operations due to a non-viable sugarcane price. The industry is willing to buy sugarcane at a price of Rs 225 per quintal.

It has not been able to make payments for the sugarcane purchased last year and owes Rs 2,300 crore to the farmers. Arrears will again pile up if they pay Rs 280 to farmers.

Uttar Pradesh is the second biggest sugar-producing state and accounts for 30 per cent of output. A prolonged delay in the state's crushing operations could trigger a rise in sugar prices.