Painting a gloomy picture of the sugar industry in Uttar Pradesh, the sugar mill owners have demanded interest-free loan of Rs 2,000 crore from the Akhilesh Yadav Government to clear the pending dues.
“The private sugar mills are in no position to clear the cane dues. The State Advisory Price of Rs 280 per quintal is exorbitantly high and no mill is in position to pay the cane dues,” Uttar Pradesh Sugar Mills Association president CB Patodia told reporters here on Thursday. The private sugar mill owners are yet to clear cane dues amounting to over Rs 3,000 crore. “The sugar mills in the state are bleeding and on the verge of closure. The state Government has tuned a Nelson’s eye to the problems of the sugar mills.
If this continues, it will be requiem for the sugar mill industry in Uttar Pradesh,” Patodia said. The UPSMA president along with captains of sugar industry, who are part of Indian Sugar Mills, met Chief Secretary Jawed Usmani and apprised him of the problems that the industry was facing. Managing Director of Dhampur Sugar Mills ltd., Gaurav Goel, said: “The SAP is too high. We can pay up to Rs 240 per quintal but the rate of Rs 280 is out of question. The only way out is that the Government give us interest-free loan.” Patodia seconded this view saying that the loan given by the Government would be utilised to clear the cane arrears of the farmers.
“If the interest-free loan is given at the rate of Rs 25 per quintal, the total amount will be Rs 2,000 crore and it will cover all the government mills as well,” he said. Director-general of Indian Sugar Mills Association, Abinash Verma, said that it was not a new precedence. “In 2007-08, the Centre gave an interest-free loan of Rs 3,500 crore. The interest component of 12 percent was borne by the Government,” he said. The sugar mill owners said the situation was so bad that in the last five years, eight sugar mills had closed down while many others have moved the BIFR (Board for Industrial and Financial Reconstruction). “UP has the highest cane price in the country and the cost of producing 1 kg sugar is Rs 35 while its selling price is just Rs 31 per kg. Thus, the mills suffer a loss of Rs 4 per kg on sugar,” the ISMA Director-General said.
The mill owners minced no words in saying that the new sugar policy announced by the Government had no takers. ‘’After 2007, no new sugar mill has been established in the state and in the present circumstances no one is eager to do so,’’ the UPSMA official said. Referring to a study conducted by CRISIl, an independent agency, the sugar mill owners said it had indicated a net loss of Rs 10 billion to the Indian sugar industry in 2012-13 because of the widening gap between sugarcane and sugar prices. Stressing the need for implementation of the Rangarajan Committee recommendation on revenue sharing between the cane growers and the mills, the ISMA Director-General pointed out that the Karnataka Government had already adopted the system leading to payment of cane dues.
However, the UPSMA members said that the UP sugar industry was committed to work with the farmers as partners in the changed environment. ‘’large-scale investment is needed in UP, both at the farmers and mill levels, not only for better efficiencies but also for better cane varieties which give better yields and higher sugar recoveries,’’ they
said.