Amidst a face-off between the Uttar Pradesh government and sugar millers on the State Advised Price (SAP) payable to farmers for the ongoing crushing season, the Centre on Wednesday discussed measures, including interest-free loans from the Sugar Development Fund, to provide relief to the cash-strapped industry. SAP is the minimum price payable to farmers for their sugarcane.
“It take eight to 10 days before we take a decision. There will be another meeting. We want crushing to start,’’ Union Agriculture Minister Sharad Pawar told journalists as he emerged from an informal meeting on Wednesday with Finance Minister P. Chidambaram and Union Civil Aviation Minister Ajit Singh.
He said sugar prices had dropped, which is why sugar industry was facing serious problems. “Three to four alternatives were discussed but we have to study what will be the impact of these measures. We will get this information in 10 days and we will meet again,” he said.
A decision could not be formalised in the absence of Food Minister K.V. Thomas and Commerce Minister Anand Sharma, officials sources said.
Earlier, several private sugar mill owners called on Mr. Pawar and gave him a memorandum of their demands.
The U.P. government had asked mills to start crushing between November 20 and 30, but factory owners on Monday suspended their operations saying they could not afford to pay even last year’s SAP as they were facing a resource crunch due to higher cost of production and decline in sugar prices. Also, banks have declined to extend them working capital loan, they said.
The SAP in U.P. last year was Rs. 280 per quintal. This year, the farmers are demanding Rs. 323 per quintal while sugar millers say they cannot afford to pay more than Rs. 225 per quintal. As a result, crushing has not begun in the State with the crop standing in the fields.
More than 60 private sugar mills in U.P., including big players like Bajaj Hindustan and Balrampur sugars, have decided not to commence crushing operations in the 2013-14 (October-September) marketing season until a “viable sugarcane price’’ is fixed by the State government.
Speaking to reporters Mr. Ajit Singh said the meeting discussed various measures. One was to provide loan to mills against excise duty payment with the interest rate to be borne by the Centre through the Sugar Development Fund.
The second option, he said, was to revise the duty drawback rate on sugar export upwards from 1.3 per cent. The industry has demanded revision to 4 per cent but the government was in no mood to raise it beyond 1.5 per cent, sources indicated.
The third measure was to reduce the period for re-export of imported raw sugar to three months from the existing 18 months.
According to Indian Sugar Mills Association, ex-factory price of sugar in Uttar Pradesh has come down by Rs. 7 per kg to Rs 29.50 per kg, while sugar rates in Maharashtra have dropped by Rs. 5 per kg to Rs 26.50 per kg in the last one year.
U.P. millers owe farmers Rs. 2,300 crore in cane price arrears.