The sugar industry in Uttar Pradesh, the largest agro-based industry in the state, is in a deep crisis. Having failed to get any positive response from the state government despite repeated pleas, the beleaguered industry has issued an appeal in the national as well as local media pleading for relief, both from the centre and the state government.

The industry, which has outstanding cane dues to the tune of almost R5,162.86 crore with farmers, has sought help from the Centre, state governments and cooperation of sugar farmers. “It has become a norm for the UP government to announce a higher-than-expected floor price for procuring sugarcane from farmers. In fact, during the last three years, there has been a whopping 60% hike in sugarcane prices from R165/quintal in the 2009-10 season to R280/quintal in the 2012-13 season. The sugar mills in the state are not in a position to handle this unwarranted hike... What’s worse is that the government has made it mandatory that mills pay at least 85% of the cane dues or else their sugar stocks will be seized... We are on the brink of a breakdown and need some immediate relief,” a miller said on the condition of anonymity.

In fact, piling of cane dues are not the only problem ailing the sugar industry. The industry itself is not getting its dues for the power it has supplied to UP Power Corporation since May last year. “This amounts to roughly R1,000 crore. If this amount is released to us, we can utilise it towards the payment of sugarcane dues immediately,” said another miller, adding that during the last three years, poor financial condition of a large number of mills has resulted in a complete stoppage of cane development activities. “A number of mills have closed down and more are on the verge of closure. This poor financial health of the mills is causing difficulty to the farmers as well.”

"Owing to this serious situation, even banks have refused additional cash credit limits to sugar mills and most of the mills have been able to clear only 68% of the cane dues. The cane price paying capacity of most of the mills is not more than R245/quintal. If the situation persists, soon the sugar industry, which is a major contributor to the revenue of the state, will start wilting and become sick”, he added.

Appealing to the state government for a remission of purchase tax of R2/quintal and society commission of R3/quintal out of the R5.10/quintal, the industry has appealed for a removal of the R2/quintal entry tax on sugar, dereservation of molasses and a cash subsidy of a minimum R15/quintal towards cane prices. The industry has demanded the central government that the 10% levy be abolished as per the Rangarajan Committee's recommendations and asked for an increase in the import duty on raw sugar and white sugar from 10% presently to 60%.