Financial Daily from THE HINDU group of publications
Tuesday, Oct 22, 2002
Agri-Biz & Commodities
UP sugar mills to delay crushing this season
NEW DELHI, Oct. 21
SUGAR mills in Uttar Pradesh which account for almost 30 per cent of the country's output say that they would not be in a position to begin crushing operations immediately in view of the current slide in open market prices and the accumulation of huge cane payment arrears from the previous season.
``We normally begin crushing around the third week of October. But this time, we will not be able to do so, considering our limited capacity to make cane payments to our growers,'' Mr C.B. Patodia, Chairman of UP Sugar Mills Association and Advisor to the Birla Group of Sugar Industries, told presspersons here.
During the just ended 2001-02 season (October-September), mills in the State made cane payments of Rs 4,480 crore, as against the payable sum of Rs 5,094 crore, leaving outstanding dues of Rs 614 crore.
Of this, the arrears of private sugar factories amount to Rs 249 crore, with the rest being accounted for by cooperatives (Rs 206 crore) and State-owned mills (Rs 159 crore).
Mr Patodia said that given the sheer burden of arrears from the previous season, ``we will find it difficult to sustain payments in the coming season, especially when sugar prices are showing no signs of recovery''.
Average ex-factory realisation from sugar during the 2001-02 season stood at 1,220 per quintal, as against Rs 1,370 and Rs 1,405 per quintal in the preceding two seasons.
On the hand, the cane price payable by factories in the State had risen from Rs 85 per quintal in 1999-2000 to Rs 90 per quintal and Rs 95 per quintal in the 2000-01 and 2001-02 seasons, respectively.
``There is a complete mismatch between what we are getting on the sugar that we are selling and the price we are paying the cane procured from growers. At current ex-factory price levels for sugar (Rs 1,200 per quintal), mills in West UP will be able to pay growers only around Rs 70, which is not only lower than the State-advised price of Rs 95 per quintal, but even the statutory minimum price (SMP) of Rs 75.14 per quintal fixed by the Centre,'' Mr Patodia stated.
Mills are currently required to pay growers the SMP within 15 days of their procuring cane, failing which these are recoverable against arrears of land revenues.
``Since we will not be in a position to pay even the SMP component this time, the only way out for us to avoid recovery notices from being issued is to not undertake crushing at all in the current season'', he added.
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