The UP Sugar Mills Association has decided to challenge the Uttar Pradesh government’s decision to hike cane price by up to Rs 40 per quintal in the Allahabad High Court. Uttar Pradesh, the country’s largest cane producing state, has fixed the state advisory price (SAP) of sugarcane at Rs 235-250 per quintal for the ongoing 2011-12 season(October-September). “There is no logic behind increasing SAP. It is a political decision. Mills cannot pay this kind of price and we are going to soon file a petition in the Lucknow bench of the Allahabad High Court challenging the hike in SAP,” UPSMA Secretary Shyamlal Gupta told reporters in Delhi. Alleging that the UP government had raised the SAP keeping in view of the upcoming Assembly polls, the Association said it would plead for scrapping of SAP announcedby the state government and for fixing an interim price. The hike in SAP is higher than the Fair and Remunerative Price (FRP) of Rs 145 per quintal fixed by the Centre for this season, he added. Pointing out that the “unreasonably” high SAP would put pressure on finances of mills, Gupta said: “At an estimated under-recovery of Rs 4-5 per kg, the sugar industry in UPcould lose almost Rs 3,000 crore in one sugar season alone”. Considering an average cane price of Rs 240 per quintal, the cost of production of sugar in UP works out to be Rs 34 per kg this season. To sustain payment of higher cane price,the ex-mill price need to improve to Rs 34 kg and retail price to Rs 37-38 per kg, at least in North India, he said. The present ex-mill price in UP is around Rs 29 per kg. Indian Sugar Mills Association Director General Avinash Verma said: “If the ex-mill price does not improve or the government keeps the prices down artificially through itspowers to release monthly sugar quota that each mill is required to sell every month, it is feared that cane price arrears may build up sooner than expected.” The anticipated loss of around Rs 3,000 crore would put more burdens on sugar mills and it will lead to mounting of cane price arrears or defaults in bank loan payments and willresult in reduction in cultivation of sugarcane next season, Verma said. UP is estimated to produce 6.6 million tonnes of sugar this season. So far, 25 mills have started crushing.
Petition against sugar cane price likely
The UP Sugar Mills Association has decided to challenge the Uttar Pradesh government’s decision to hike cane price by up to Rs 40 per quintal in the Allahabad High Court.
Uttar Pradesh, the country’s largest cane producing state, has fixed the state advisory price (SAP) of sugarcane at Rs 235-250 per quintal for the ongoing 2011-12 season
(October-September).
“There is no logic behind increasing SAP. It is a political decision. Mills cannot pay this kind of price and we are going to soon file a petition in the Lucknow bench of the Allahabad High Court challenging the hike in SAP,” UPSMA Secretary Shyamlal Gupta told reporters in Delhi.
Alleging that the UP government had raised the SAP keeping in view of the upcoming Assembly polls, the Association said it would plead for scrapping of SAP announced
by the state government and for fixing an interim price.
The hike in SAP is higher than the Fair and Remunerative Price (FRP) of Rs 145 per quintal fixed by the Centre for this season, he added.
Pointing out that the “unreasonably” high SAP would put pressure on finances of mills, Gupta said: “At an estimated under-recovery of Rs 4-5 per kg, the sugar industry in UP
could lose almost Rs 3,000 crore in one sugar season alone”.
Considering an average cane price of Rs 240 per quintal, the cost of production of sugar in UP works out to be Rs 34 per kg this season. To sustain payment of higher cane price,
the ex-mill price need to improve to Rs 34 kg and retail price to Rs 37-38 per kg, at least in North India, he said. The present ex-mill price in UP is around Rs 29 per kg.
Indian Sugar Mills Association Director General Avinash Verma said: “If the ex-mill price does not improve or the government keeps the prices down artificially through its
powers to release monthly sugar quota that each mill is required to sell every month, it is feared that cane price arrears may build up sooner than expected.”
The anticipated loss of around Rs 3,000 crore would put more burdens on sugar mills and it will lead to mounting of cane price arrears or defaults in bank loan payments and will
result in reduction in cultivation of sugarcane next season, Verma said.
UP is estimated to produce 6.6 million tonnes of sugar this season. So far, 25 mills have started crushing.