Link cane prices with sugar: UP Sugar Mill Secy

Sugar mills in Uttar Pradesh (UP) have given notice to the government, sugar commissioner and the stock exchanges that they will not be able to go ahead with crushing at current sugarcane prices. The special advisory price that sugar mills pay to farmers was increased to Rs 280 from Rs 165, just three years back, a 70 percent increase. On the other hand, sugar prices have been hiked by just 7-8 percent over the last three years. Also, at Rs 36 per kilogram, UP has the highest cost of production for sugar globally.

Also Read: UP sugar crisis: Price over Rs 225/qnt unviable, says ISMA
Deepak Guptara, Secretary of UP Sugar Mill Association, says there have been some rounds of talks with the UP government on the issue, but they are still awaiting positive action. He says the basic problem is rationalising cane prices. "Cane prices are arbitrarily fixed and because of this today we are being outpriced within the country itself," he says.
According to him, the only long-term solution to this problem is somehow linking sugar prices and cane prices, for which he has been requesting the government to consider the Rangarajan committee formula. Below is the verbatim transcript of Deepak Guptara's interview on CNBC-TV18 Q: Earlier today we also spoke to the ISMA chief and to a couple of sugar companies, what is the sense you are getting in terms of the government’s response, have you heard from them, we understand some of the cabinet ministers in the central government are meeting informally on the matter but this is the UP government’s problem or UP government’s issue, have you heard from them?
A: We haven’t heard as yet from them. We are waiting for the response. We have been putting our side of the problem before the state government for some time now and we have had some rounds of talks, but we are looking forward to a positive action from their end. We are yet to hear from them. Q: We understand that the informal meeting today could consider a soft loan to the sugar industry or increase in their ethanol blending to 10 versus 5 percent, will that be an acceptable resolution for you all to restart your operations if that comes through hypothetically?
A: The basic problem here is rationalisation of the cane prices. Unless cane prices are rationalized, year-on-year (Y-o-Y) we have been suffering heavy losses for some years now and this problem needs to be sorted out. This is now becoming a question of our survival. You see the cane prices are arbitrarily fixed and because of this today we are being outpriced within the country itself. The sugar produced in UP will have no takers because cheaper sugar from down south and west is coming over to northern markets and we are losing our traditional markets also. So one has to look at the raw material pricing very closely. Q: You mean the only acceptable solution for the UP sugar mill association will be if cane price are rationalized, if you get any other intermediate steps to provide relief like a soft loan etc, it is not going to help you all and you all may not accept it?
A: We are looking at a long-term solution of this problem, any patchwork here and there might help in the shorter run but we have to look at the longer solution and longer solution will come only when sugar prices and cane prices are somehow linked and for that we have this Rangarajan committee formula and we have been requesting the state government to kindly consider this.