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Harish Damodaran

NEW DELHI, Nov. 15

SUGARCANE growers and mill owners in Uttar Pradesh are on a major collision course, following the latter's move not to undertake any crushing during the current season till cane prices are brought down to the statutory minimum price (SMP) fixed by the Centre.

While crushing of cane traditionally begins around the first week of November in Western UP and by the second week in the Central parts, so far only a couple of private mills — including Modi Sugar Mills and Bajaj Hindustan Ltd — have, however, commenced operations in the current 2002-03 sugar season (October-September).

``We have fixed November 21 as the date for starting crushing operations in West and Central UP and November 25 in the case of East UP. But this would be subject to our paying the SMP for the cane supplied by growers. We have, therefore, requested the State Government to make the necessary security arrangements to enable farmers to deliver their cane at this rate,'' said Mr C.B. Patodia, Advisor to the Birla Group of Sugar Industries and President of the UP Sugar Mills Association (UPSMA).

The average SMP payable by factories during the 2002-03 season works out to Rs 75.14 per quintal in West UP and Rs 71.34 per quintal in Central and East UP. This is way below the price of Rs 100 per quintal on early ripening cane and Rs 95 on common varieties that was fixed (`advised') by the State Government for even the 2001-02 season. Although the UP Cabinet, in its meeting on November 12, decided not to effect any increase in the state advised price (SAP) for the 2002-03 season, the mills say that they would not be in a position to pay even the previous year's `advised' rates of Rs 95-100 per quintal.

In other words, the industry is effectively seeking a Rs 20-25 reduction in the price of cane supplied by growers. ``Considering the steep decline in open market prices of sugar, we have no option but to pay a lower cane price. We also believe that 80 per cent of farmers in the State are ready to deliver cane at the lower price, provided adequate security arrangements are made,'' Mr Patodia stated.

The lower cane price is, however, not acceptable to sugarcane growers, led by the Bhartiya Kisan Union (BKU). The veteran BKU leader, Mr Mahender Singh Tikait, is even planning to stage a massive rally in Lucknow on November 17, protesting against the attempt to slash cane prices in a severe drought year and the State Government's indifference to the woes of the farming community.

The BKU claims that the `inability to pay' argument trotted out by the industry lacks any basis. ``For every quintal (100 kg) of cane crushed, the mills obtain not only 10 kg of sugar, but also six kgs of mollasses and four kg each of baggase and pressmud. Even if the average ex-factory price of sugar has dipped to Rs 12 per kg, if one computes revenues from other streams (taking average rates of Rs 100 per quintal each for mollasses and baggase and Rs 10 per quintal for pressmud), mills realise over Rs 130 on every quintal of cane they purchase at Rs 100,'' a BKU spokesperson said.

He added that even after accounting for conversion and processing costs, the mills would be left with a fair margin, which renders any reduction in cane prices ``totally unacceptable''.

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