What could be termed as a repeat showdown between the Uttar Pradesh government and the private sugar mills owners, the Uttar Pradesh Sugar Mills Association (UPSMA) has threatened to close down all the private sugar mills and stop crushing from the coming season if their demands are not met.
The private sugar mills, around 95 in numbers, still have a due of over Rs 5,900 crores of the cane-farmers of the previous crushing season and now they have surrendered operation saying “they are unable to pay the dues.” However, both the state government and the private sugar mills are waiting for the Allahabad High Court’s hearing on July 24 for their next step.
The private sugar industry has been pleading for the ‘linkage formula’ and doing away with the uncertainty of arbitrary and high sugar advisory price (SAP), which the state announces every year. They are also demanding a subsidy of Rs 9 per quintal on the last year’s SAP.
UP government has already said that they will initiate stringent action against the private mills for not paying the farmer dues and arrest warrants have been issued against the managers and owners of several of these mills.
But as the new crushing season in the state would start from October 1 and UP government could hike the State Advisory Price(SAP) of the cane, the ongoing tussle between the two would escalate in the coming days.
Recently UPSMA has written a letter of appeal to the UP government asking it to come to its rescue, saying otherwise it would be forced to serve a notice to discontinue manufacturing operations in the state.
Stating that the ‘financially distressed industry is no longer able to see a future for itself in the state, the letter states that the business environment has been vitiated and the industry does not find any reason to trust the government with its promises.
UPSMA president C B Patodia in his letter alleged that the coercive actions on the private mills are giving a feeling of being treated as criminals in the state where we have invested money, time and energy in the past decades.
“The state is looking to attract new investors, but it is unfortunate that the sugar industry is beset with a feeling of betrayal and helplessness, which has never been so high in the past years,” it further said.
The UP government, on its part, had assured that it would look into the grievances of the industry. A committee under the chief secretary has recommended rationalisation of the sugarcane pricing policy and also promised a subsidy of Rs 9 per quintal of cane to assist in bridging the gap between SAP and the paying capacity of the industry.
The letter said to top the grievances of the industry, the state has undertaken coercive action such as issuing recovery certificates, seizing sugar stocks, locking godowns and also auctioning sugar.”The sugar mills have been downgraded by almost all rating agencies like CRISIl, ICRA, Ind-Ra. With other states adopting the ‘linkage formula’ and UP still not moving away from the arbitrariness on cane pricing, banks are already showing reluctance to finance the mills, forecasting a sure loss season next year,” it said.
lastly the letter said after a lot of thought, the UPSMA is constrained to make its final requests to enable the mills to decide to operate in the 2014-15 season.