UP govt puts temporary ban on raw sugar imports

Owing to major law and order problem in the state, Uttar Pradesh government has asked all the concerned districts to ban off-loading of raw sugar to private sugar mills in western parts of the state.

FRP only for levy sugar:

There were reports from leading brokerages that the shift to Fair and Remunerative Price (FRP) is a structural move and UP sugar mills will have huge margin expansion because the cane cost would be considerably lower but that will now be the case only for the 20% levy quota of sugar. The 80% of the cane price will still be market determined and that for the next two years is going to be quite high because of the cane short supply.

So basically we will have to keep an eye on State Advised Price (SAP) and on FRP both for the next season and what they come in at and the difference is going to be paid only for the levy sugar by the state government.

In an interview with CNBC-TV18, SP Tulsian of sptulsian.com spoke about the ban on import of raw sugar and its ramifications going forward.

Below is a verbatim transcript:

Q: What have you read into that temporary ban and do you fear it might become a permanent ban on raw imports?

A: There is great protest by farmers in UP post this announcement of FRP because state government has announced State Advised Price (SAP) at Rs 165 per quintal while the farmers have been demanding at Rs 200 per quintal in UP. The agriculture leader Mahindra Singh Tikait has been on dharna and there is huge agitation, they have been burning sugarcane crop and day before a truck load of raw sugar imported by Bajaj Hindusthan the farmers have not allowed that to get unloaded. So, this is just to keep law and order under control that this order has been issued.

I don’t think there will be a permanent ban because there has been judgement of Venus Sugar of Supreme Court which says the entire sugarcane by farmers has to be given to the sugar mill at SAP.

Here the demand of the farmers is that when we can fetch Rs 200 per quintal by giving it to the gur and khandsari why we should be compelled to give the sugarcane crop at Rs 165 or Rs 130 per quintal? So, there has been agitation.

I don’t think there has been any reservation or oppose even on part of the sugar mills also to pay as high as Rs 180-200 per quintal because we all know that the crop is quite less, production is going to be less, realization of sugar will be good and that is the reason in last one week we have seen the prices of sugar rising by about Rs 3 to Rs 3.50 per kg.

In fact, the sugar from southern mills has started to the Northern part of the country even by incurring a transport or freight cost of Rs 3 per kg. Theoretically there are no stocks available with the mills, whatever release orders given by government are not getting discharged because mills are saying we are not having any inventory with us. So maybe by November 15, the situation will further aggravate because I don’t think even in Western UP any mills can start crushing by November 20.