Chandigarh, November 21 Upset over the high state agreed price (SAP) announced for sugar this year, private sugar mills in the state have refused to crush cane this season.
The mills have expressed their inability to pay farmers Rs 295 per quintal, as announced by the Punjab government.
The crushing was to begin yesterday. But private mill owners have decided against it.They are demanding that the state government should first decide on a subsidy of Rs 45 per quintal on the new SAP and on doing away with the purchase tax and sugarcane cess imposed over and above the SAP.
The mill owners say if this is not done, private sugar mills will be forced to shift to either Maharashtra or Uttar Pradesh.
The seven private sugar mills in the state crush 70 per cent of the cane ( 367 lakh quintals) and the nine cooperative mills 30 per cent (130 lakh quintals).
This year, one lakh hectares were under cane cultivation because of the government’s efforts to wean away farmers from the wheat and paddy cycle and diversify to other crops, such as sugarcane.
Talking to The Tribune today, Inderbir Singh Rana, managing director, Rana Sugars, said there was a huge disparity in the prices of cane in Punjab and those in major cane-producing states such as Maharashtra, Karnataka and Uttar Pradesh. “The Punjab government should not have raised the SAP by Rs 5 per quintal this year, especially when the sugar prices are on the decline. Till 2012, the cane price was Rs 250 per quintal, which was raised to Rs 290 per quintal last year.
“The sugar price is now Rs 2,850 per quintal. But in Punjab, we will buy sugarcane at Rs 3,050 per quintal.
“After taking into account the cost of production and taxes, the cost of sugar in the state will be Rs 3,200 per quintal. But because of high sugar production globally, the prices will continue to be low and we will incur a loss of Rs 300 per quintal,” he argued.
Punjab is a minor sugar-producing state and sugar prices are determined by major sugar-producing states. Since the SAP in Uttar Pradesh is Rs 280 per quintal (with the state government offering Rs 30 per quintal as subsidy to private sugar mills) and Rs 220 per quintal in Maharashtra and Karnataka, the sugar mills in these states can afford to sell sugar at the current price of Rs 2,850 per quintal.
The demand for sugar is much higher in Punjab (60 lakh tonnes) than the sugar produced (45 lakh tonnes). But sugar produced from outside the state determine the sugar prices in Punjab,” explained Jarnail Singh Wahid, president, Punjab Private Sugar Millers Association. The association has given an ultimatum to the state government.
“The state government is already giving a subsidy of Rs 112 per quintal. Private millers should be given at least Rs 45 per quintal as subsidy to make crushing viable,” Wahid said.
The bitter pill