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The Uttar Pradesh sugar industry has opposed the demand for transport subsidy by the Maharashtra sugar industry. UP Sugar Mills Association said the demand for transport subsidy of Rs 1,500 per metric ton for sale of sugar outside the Maharashtra state had the potential to disturb the sugar trade in the country.
CB Patodia, president of Uttar Pradesh Sugar Mills Association, has written to the Union government that sugar is an essential commodity sold freely without trade barriers from sugar-producing states to consuming states and a transport subsidy would provide an unfair advantage to Maharashtra.
"Not only will the sugar sale in UP suffer, the cane price payments to millions of farmers shall be jeopardised," the letter said. "A unilateral incentive or rebate will vitiate the market dynamics and major sugar-producing states shall have a great disadvantage," it added.
The letter said sugar was a highly price-sensitive commodity and the component of transport cost in overall pricing determined the market acceptance and geographical location of the buyer and added that traditionally, UP's sugar mills sold their produce in the eastern and north-eastern parts of the country.
"Over a period of three to five years, production volumes have gone up in the state, while consumption of sugar has not seen much change. As a net sugar surplus state, it is incumbent on UP to sell its sugar outside and into its traditional markets," it said.
The letter said the association was also requesting the UP government to provide a similar rebate/incentive to sugar mills in the state so that they could survive in the marketplace.
"In a free market regime, where sugar flows freely from one end of the country to the other end, what is the need to give protection to one's produce? Secondly, Maharashtra should be looking at markets that it has been doing business in traditionally and which are closer to it geographically. Why do the sugar mills of Maharashtra want to increase their transport expense? What is the logic in going to markets that are far off, for which they are demanding subsidy?" the letter asked.