The flare-up involving farmers and sugar mill owners in Uttar Pradesh is threatening to shut the whole industry. Vivek Saraogi, head, Balrampur Chini Mills, has warned that if the state government fails to act in a timely manner, farmers will force its hand.       

Sugar mills in UP, including Balrampur, have decided not to start operations till the state cuts cane prices or links the same to sugar pricing. Indications are that an agitation is on the cards by mid-November, which may push the state to resolve the crisis if the crop is not lifted by that time.

And the crisis couldn’t have been more ill-timed, with sugar prices hitting the bottom on Diwali – an occasion when people lap up all things sweet -- Saraogi, who represents the sugar industry in various fora, has told analysts.

“If the fields are not cleared by middle of November, the farmers are not going to listen. Second, whatever is evacuated is fetching ridiculously low prices (to gur and khansari makers). The urgency (on part of the state to resolve the crisis) will happen post November 15,” he said.
The mills have been demanding that the government implement the C Rangarajan committee report on sugar sector decontrol in full as high state-advised price (SAP) of Rs 280 a quintal coupled with subdued market prices have turned production unviable and threatened a ‘no crushing’ season beginning October.

But despite such threats and the fact that other sugar-producing states like Karnataka and Maharastra are appearing to move towards rationalisation of SAP prices, the Akhilesh Yadav government has refused to budge even as cane arrears to farmers in the state have touched Rs 2,200 crore.

“We understand Karnataka has already set up a sugarcane control board to decide the cane price adopting the Rangarajan formula while Maharastra is actively considering it. UP, which produces about 30% of country’s production can’t continue to price sugarcane in an isolated way. There will be no survival if this is the way ahead,” Saraogi said.

Apart from “an unreasonable sugarcane price”, the new season is beginning with a high sugar stock.

“Now with banks and rating agencies clarifying that there is no ability to start (operations by the industry), you will be only building up arrears. On top of it, an election year is coming. In such a scenario, there is no point in starting. You would be losing less money by remaining shut.”