Concession, relaxation and bailout packages are the flavour of the season accentuated by coronavirus pandemic in India, especially Uttar Pradesh. Keeping in sync, the sugar industry honchos sought bailout packages from the government, citing huge losses due to demand slump and also the burden of paying up cane arrears in times of lockdown. Uttar Pradesh Sugar Mills Association (UPSMA) submitted a memorandum to Chief Minister Yogi Adityanath, seeking cash subsidy. UPSMA chief CB Patodia urged the government to bail out the industry by cash subsidy, which could help augment cash flow and ensure continuation of cane crushing operations and payment of cane arrears. Highlighting stress areas, the UPSMA said that the lockdown brought in considerable hardship for the industry as institutional sale of sugar dipped massively. “The off take of sugar by various industries, like confectionery, sweets, chocolates and aerated soft drinks, came to a grinding halt. The demand for sugar has been at its lowest in decades. Consequently, most mills are unable to sell even monthly quota and are forced to store sugar in the open as factory godowns have run out of space,” Patodia said, “Market sentiments are low and hence sugar prices are on a downward spiral. We are hence finding it hard to sell even at minimum sale price (MSP) fixed by the Centre,” the UPSMA letter said. To add to their woes, sale of ethanol has dipped due to non-lifting by oil marketing companies and power dues of Rs 1,500 crore on UP Power Corporation (UPPCL) have not been cleared for more than a year. “Cash flow in the industry has been severely impacted and the sugar mills’ revenue has been tightly squeezed,” Patodia said. To complicate the problem further, the current sugar season has been prolonged as diversion of cane to kolhus and khandsari units and retail sale of cane juice has vanished due to the lockdown and all the cane is now diverted back to the mills. With temperatures rising, the recovery of sugar from cane is also going down, thereby further raising the cost of production. Reiterating that it has been the endeavour of sugar factories to follow cane payment cycle as far as possible, the letter says that mills are finding it difficult to meet cane price payment obligation further. “It is in this ‘hour of deep crisis’ that the sugar industry is looking for a bailout to help the largest industry in the state, with whom millions of people are directly connected,” Patodia said. Earlier, a NITI Aayog task force recently recommended a slew of measures to aid the liquidity-starved industry. These included, a cess at Rs 50 per quintal (excluding exports) for three years, during which about Rs 4,500 crore would be garnered to help provide bridge funding or act as a comfort for banks giving soft loans to mills for improving technologies or paying to farmers, a one-time increase in minimum selling price for sugar to Rs 33 per kg (from Rs 31) to unburden mills, capping of farmer’s land use for sugarcane at 85 per cent of total holding and a cash incentive of Rs 6,000 per hectare for farmers shifting to alternative crops from sugarcane.
The report on sugarcane and sugar industry by NITI Aayog was submitted on April 21 and has been forwarded to ministries of agriculture, commerce, finance and water resources for action.