With the new sugar crushing season almost here, there is little enthusiasm among farmers as well as the factories in Uttar Pradesh.

In fact, many factories have still not given the cane department their requirement proposals for next year, without which the department cannot make cane reservation for the over 125 sugar mills in the state. And the reason is not hard to find.

With the state government increasing cane prices by R30-40/quintal every year for the past many years, the industry is worried that this year, too, the state will fix a cane price that is beyond its reach, especially with general elections coming up next year.

With last year’s cane price becoming a hard pill to digest, millers are of the view that they would not like to commit themselves to a cane requirement that they may not be financially viable to buy. “It is better for us not to operate our mills optimally rather than run them at full pace and produce sugar that will be financially unviable for us.

The cane price of R280 per quintal last year increased our cost of production of sugar to around R3,600 per quintal. With the sugar prices pegged at R3,000 per quintal, the industry is expected to suffer a loss of R4,500 crore in the sugar season 2012–13,” said an industry insider, adding that even after months of last season coming to a close, the industry’s cane arrears stood at an all-time high of R2,540 crore.

The UP Sugar Millers Association has, in fact, given a representation to the cane commissioner drawing his attention to the grim situation that the industry finds itself in, especially in the backdrop of the state government taking coercive measures against the industry, such as issuing recovery certificates on errant mills that have not made cane payments to farmers.

“It is extremely important that we once again draw your kind attention to the grave financial crisis through which the sugar industry is passing and also to stress the need for the government to appreciate these problems and help us in this hour of need,” the letter states.

“The continuous losses have resulted in cane price arrears that currently stand at R2,540 crore despite best efforts of the industry to clear it.”