Sugar Mills Effect 8 Percent Cut In Cane Prices (18-Feb-2010)
Following the drastic fall in sugar realisation by 15 per cent over the last fortnight, the sugar mills in Uttar Pradesh and the neighbouring Uttarakhand have decided to reduce the price paid to farmers for sugarcane by nearly 8 per cent (Rs 20 a quintal). The move by the sugar millers is aimed at ensuring good returns in case of declining sugar prices.
UP Sugar Mills Association (UPSMA) and the Uttarakhand Sugar Mills Association took the decision at a meeting.
To cut the sugar prices by Rs 20 a quintal was unanimously decided by the members, since there was a steep decline in the sugar prices owing to the intervention by the central government and there will be a review of the situation, if there is a further decline in sugar prices, said a UPSMA official.
Currently, the mills in UP are paying Rs 260-265 a quintal to farmers while farmers in Uttarakhand are getting Rs 270-275 a quintal.
Ever since the crushing started in November, the mills in UP had been increasing prices at regular intervals. This took prices to the current level of Rs 260-265 a quintal (compared to the state-advised price, or SAP, of Rs 165-170) since the sugar realisation had also been rising.
Following the sugarcane shortage and improvement in sugar prices, the farmers in the state had been agitating for Rs 280 a quintal. The mills last year had paid the SAP of Rs 140-145 a quintal.
As per the industry estimates, the production cost of sugar at Rs 260 a quintal of sugarcane (linked to 9 per cent recovery) and including the conversion cost and interest charges (and offsetting molasses and power revenue and accounting for a 20 per cent levy at a price of Rs 1,300-1,400 a quintal) stands at Rs 3,700 a quintal.
Mr. Sharad Pawar, the Food Minister earlier this month has said that the country will have enough sugar this year, but the prices of sugar will continue to be higher because of the low output in sugar. Further he said rising prices of sugar is a big concern for the government.
Along with the Food Minister, the Prime Minister Man Mohan Singh in a meeting with the Indian Sugar Mills Association (ISMA) has also expressed concern regarding rising of sugar prices and their possible impact on consumer prices , said an official.
According to the data published of sugar processed up to December-January shows a fall of almost 10% in UP alone while around 2.5% countrywide, compared to the same time last year. The estimates of 16 million tonnes for the current crushing season could be affected if the down trend in sugar processed continues for the crushing season.
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