Lucknow, May 11(UNI) The sugar industry in Uttar Pradesh, which has been reeling under the impact of the Covid-19 pandemic and has a burden of cane dues worth Rs 14,300 crore, has sought a bailout package from the state government.
The lockdown has led the industry to slump down, saddling it with the burden of clearing Rs 14,300 crore of the sugarcane farmers due in the current cane crushing season 2019-20.
The Uttar Pradesh Sugar Millers Association (UPSMA) has presented the same in front of the Chief Minister Yogi Adityanath seeking cash subsidy.
The UPSMA president CB Patodia has urged the government to bail out the industry by way of a cash subsidy, which shall help augment the mills’ cash flows and ensure the continuation of cane crushing operations and cane price payments.
Highlighting the stress areas, UPSMA said in a statement issued today that the lockdown has brought in considerable hardship for the sugar industry as the institutional sale of sugar has dipped massively.
“The off-take of sugar by various industries, like confectionery, sweets and chocolates and aerated soft drinks have come to a halt and the demand for sugar, therefore, has been at its lowest in decades,” said Mr Patodia, adding that as a direct consequence most of the mills are unable to sell even their monthly quota and have been compelled to store sugar in the open as they have run out of the space in the factory godowns.
“The market sentiments are also low and hence sugar prices are witnessing a downward spiral. The mills are, therefore, finding it hard to sell sugar even at the minimum sale price (MSP) fixed by the Union government,” the letter said.
To add to the woes, the sale of ethanol has been poor due to non-lifting by the oil marketing companies and power dues of Rs 1,500 crores have not been cleared by the Uttar Pradesh Power Corporation (UPPCL) for more than a year.
“The cash flows of the industry have been severely impacted, as a result of which the sugar mills’ revenue has been tightly squeezed,” said Patodia.
To further complicate the problem, the current sugar season has also been prolonged this year as the diversion of cane that usually goes to kolhus and khandsari units and retail sale of cane juice has come to a grinding halt due to the lockdown and almost all the cane is now being diverted back to the sugar mills. With temperatures rising, the recovery of sugar from cane is also going down, which is further raising the cost of the production of sugar.
Reiterating the fact that it has been the endeavour of the sugar factories to follow the cane payment cycle for as far as possible, the letter says that the mills are finding it extremely difficult to meet their cane price payment obligation further. “It is in this ‘hour of deep crisis’ that the sugar industry is looking for a bailout to help the largest industry in the state with whom millions of people are directly connected,” Patodia said.
It may be mentioned that a Niti Aayog task force (TF) has recently recommended a slew of measures to aid the liquidity-starved industry.
These include, among other things, a cess at Rs 50/quintal (excluding exports) for three years, during which about Rs 4,500 crore would be garnered, that will help provide bridge funding or act as a comfort for banks giving soft loans to mills for improving technologies or paying to farmers, a one-time increase in minimum selling price for sugar to Rs 33/kg (from Rs 31) to unburden mills, capping of farmer’s land use for sugarcane at 85 per cent of total holding and a cash incentive of Rs 6,000/hectare for farmers shifting to alternative crops from sugarcane.
The report of the panel on sugarcane and sugar industry, headed by Niti Aayog member Ramesh Chand, was submitted on April 21 and has been forwarded to the ministries of agriculture, commerce, finance and water resources for action.
