Sugarcane pricing threatens to snowball into major crisis

Centre asks States to resolve matter so that crushing can start

November 28, 2013 07:02 pm | Updated May 26, 2016 09:59 am IST - NEW DELHI/LUCKNOW

Sugarcane is ready for transportation to a Sugar Factory in Muzaffarnagar district, Western Uttar Pradesh.
Photo: Sandeep Saxena March 15, 2004

Sugarcane is ready for transportation to a Sugar Factory in Muzaffarnagar district, Western Uttar Pradesh. Photo: Sandeep Saxena March 15, 2004

Even as the Centre asked the States on Thursday to resolve the issue of sugarcane pricing, the matter is threatening to snowball into a major crisis after the Uttar Pradesh government asked millers to start crushing by December 4 or face action.

On Wednesday, the State government lodged First Information Reports against four millers and threatened to act against those who have not cleared arrears. But it agreed to consider the demand for linking the State Advised Price of sugarcane with sugar prices and announced a high-powered committee, headed by the Chief Secretary, to work out a permanent cane price formula from the next sugar season (2014-15).

The Principal Secretary, Sugar Industry and Sugarcane Development, Rahul Bhatnagar, told reporters that representatives of the cane farmers and sugar mills and experts would be on the panel.

The action came after the Centre appealed to millers and farmers to cooperate with the State governments in facilitating crushing operations. Crushing starts in October-November, but this year the “cash-starved” millers have decided not to crush, arguing that they cannot pay farmers the State Advised Price of Rs. 280 a quintal on account of surplus stocks and decline in sugar prices.

Union Minister of State for Consumer Affairs and Food K.V. Thomas urged mill owners and farmers not to precipitate the matter. “The Centre is willing to consider all steps to help the sugarcane farmers and industry. Delay in harvesting and crushing affects both, as operations have already been delayed. I appeal to all farmers to cooperate with the State governments and start supplying to mills.”

The Minister earlier met Union Finance Minister P. Chidambaram and the Chairman of the Prime Minister’s Economic Advisory Council, C. Rangarajan, to discuss a financial package for the industry. It may include interest-free loan, higher duty on import and incentives for export and buffer stock on government account.

Mr. Thomas said the Sharad Pawar-led informal group of ministers, set up by Prime Minister Manmohan Singh, would decide on the demands of the industry. Mr. Pawar, who is away on tour, is expected to return next week.

The Rangarajan panel had made eight suggestions for de-control of the sugar industry; the Centre has implemented three, and the others need to be implemented by the sugar-growing States. “Mr. Rangarajan has offered to talk to the State governments on his formula.”

Rejecting the Uttar Pradesh government’s offer of a panel to look into the pricing issue, Indian Sugar Mills Association Director-General Abhinash Verma said no committee could be higher then the Rangarajan panel. If millers in Uttar Pradesh had to pay Rs. 280 a quintal to growers at a realisation of Rs. 29 or Rs. 29.50 a kg, “crushing cannot start.” At the present rate of realisation, millers can pay Rs. 225 a quintal. However, farmers in the State demand Rs. 40 a quintal higher than last year’s price.

Rejecting a State Advised Price of Rs. 225 a quintal suggested by the Uttar Pradesh Sugar Mills Association, Mr. Bhatnagar said the government did not want farmers to suffer because of the stalemate.

He said the government had given several concessions to millers, and the burden of levy sugar was not there either, as the industry had been de-controlled. Besides, millers were likely to get an interest-free loan from the Central government.

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