New Delhi, January 1:  

The Uttar Pradesh Sugar Mills Association (UPSMA) has communicated to the Principal Secretary (Sugar) of the State Government that mills operating in the State are not in a position to pay even the Fair and Remunerative Price (FRP) for sugarcane, given low demand and sliding prices of the commodity.

“Under the tagging policy, factories are not in a position to make payment of even Rs.200 a quintal of cane. You will appreciate that the current sugar prices do not even allow payments at Fair & Remunerative Price i.e. Rs.220 for 2014-15,” said Deepak Guptara, Secretary, UPSMA, in a letter dated December 29.

The FRP is set by the Centre but the UP Government determines the price of sugarcane with a State Advised Price (SAP). The SAP, announced by the State in mid-November, was set at Rs.240/quintal for the 2014-15 season. It is mandatory for mills to pay the amount to cane farmers within 14 days of procurement failing which a penalty must be paid.

“Despite an unprecedented drop in prices, there seems to be no demand and buyers are not coming and as such the sale is severely hampered,” the association said. It also reiterates industry suggestions to aid cash-strapped mills by extending the export incentive for raw sugar (currently being examined by the Centre), stop all imports of raw sugar into the country and to create a buffer stock of at least 30 lakh tonnes (lt).

Ex-factory price of sugar in UP was about Rs.2,750/quintal earlier this week, down from Rs.3,000 in November.

The industry complained late last month that UP sugar was becoming less competitive owing to high production costs compared to States such as Maharashtra and Karnataka, where a rationalised cane pricing policy on the basis of the Rangarajan Committee-recommended formula has been implemented.