Sugar crisis: UP demands 100% hike in sale quota to 1.1 million tonnes

Photo: Reuters
Juxtaposed to lingering sugarcane payment crisis and accumulation of unsold sugar inventory in Uttar Pradesh, the Yogi Adityanath government has demanded almost doubling of the monthly sugar sale quota of the state sugar mills to over 1.1 million tonnes (MT).

UP sugarcane commissioner Sanjay Bhoosreddy has written to the union food secretary to increase the sugar sale quota to 1.133 MT to facilitate speedier payments to farmers and easing the inventory build up.

He said the state mills had sugar carryover stock of more than 2.6 MT pertaining to the previous crushing season 2017-18, when UP had produced over 12 MT of the sweetener.

During the current season, already underway, the state mills are expected to produce nearly 12.5 MT of sugar till next year, of which the export quota is estimated at 1.75 MT.

Consequently, the net availability of sugar with UP mills is expected to be around 13.6 MT after adding fresh production and carryover stock and deducing export quota. Taking into account 12 months between Dec 2018 and Nov 2017, the state would require monthly sugar sale quota of 1.133 MT to clear the stocks, Bhoosreddy mentioned in his letter.

In June, July, Aug, Sep, Oct and Nov 2018, the effective monthly sale quota stood at merely 625,000 tonnes; 540,000 tonnes; 611,000 tonnes; 683,000 tonnes; 806,000 tonnes; and 767,000 tonnes respectively, much below the actual requirement, thus compounding the crisis.

The state has also demanded higher ex-factory floor price of sugar at Rs 3250/quintal up from the current level of Rs 2900/quintal, claiming that the Kanpur-based National Sugar Institute (NSI) had computed average sugar production cost of UP mills at Rs 3400/quintal.

Bhoosreddy claimed that bulk consumers accounted for 65% of sugar consumption and as such an increase in the floor price would not pinch the actual consumers much, but it would surely ensure prompt payment to farmers, maintain the financial health of sugar industry and promote allied industries as well.

Meanwhile, Bhoosreddy has ordered for filing first information reports (FIR) under Section- 3/7 of the Essential Commodities Act (ECA) against 7 private sugar mills viz. Malakpur, Walterganj, Bisauli, Brijnathpur, Gagalheri, Bulandsahar and Gadaura sugar mills.

Earlier, FIR had already been lodged against the sugar mills, including Malakpur and Modinagar (Modi Group) and Brijnathpur and Simbhawali (Simbhawali Group) over sugarcane arrears and under-weighment during 2017-18 crushing season.

Besides, recovery certificates (RC) have been issued against 9 sugar mills having highest sugarcane outstanding, namely Malakpur, Walterganj, Modinagar, Bisauli, Brijnathpur, Gagalheri , Bulandsahar, Chilwaria and Gadaura. These mills belong to the Bajaj Hindusthan, Simbhaoli, Wave and Modi Groups among others.

The RC empowers the respective district magistrate to seize the movable and immovable properties of these sugar mills to recover arrears through the auction. Currently, more than Rs 22 billion are outstanding on private millers of the total Rs 354 billion worth of sugarcane sold to 119 sugar mills during 2017-18 crushing season.

Meanwhile, the UP mills have produced nearly 2 MT of sugar during the current 2018-19 season.

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