Friday, December 09, 2022


Private Sugar mills owners in Punjab refused to run operation

PUNJAB NEWS EXPRESS | October 02, 2022 10:10 AM

CHANDIGARH: Punjab Private Sugar Mills Association has urged the Chief Minister Bhagwant Mann that unless the state government does not pay the differential between the FRP and the SAP, they will not be able to run operations as they were no longer in a capacity as all their resources had been exhausted.

In a representation to the Chief Minister, the Association said, the government of India has fixed Rs 305 per quintal as Fair and Remunerative Price (FRP) for sugarcane while Punjab has fixed the State Advisory Price (SAP) at Rs 360 per quintal. This, the association said, was beyond their paying capacity.

The association said Punjab sugar millers were at a disadvantage as the recovery (from sugarcane) in Punjab was 9.58 percent as compared 10.90 to 11.47 percent in various other states like Uttar Pradesh and Maharashtra. Recovery means the percentage of sugar extracted from one quintal of sugarcane.

Punjab sugar mills are in no position to start the bonding of cane until and unless the Punjab government comes up with a clear policy on the SAP Price, the association said, adding, “any difference between the FRP and the SAP should be borne by the state government”.

The association suggested that either the SAP should be re-fixed or an alternative subsidy granted for the price difference between SAP and FRP.

Giving details, the association said, for the crushing season 2021-22, the government of Punjab had fixed SAP @ Rs. 360/- per quintal, whereas FRP was fixed by the central government at the rate Rs. 295 /- per quintal.

The mills, it added, have suffered huge financial losses in the past crushing season, which has “wiped off reserves of the mills and brought them into negative”. The situation of the mills after the end of the crushing season is such that the mills still owe about Rs. 125 crores for cane dues to farmers, the private millers said, adding the financial position of mills, not just private but co-operatives also is such that the mills are unable to clear the outstanding dues.

The promoters of private mills are making best efforts to clear the outstanding dues from their personal sources, which are also on the verge of getting exhausted. Close to 90% of the outstanding cane dues is already cleared, the association said.

The association said, for the current season, 2021-22, the total cost of production of sugar comes to about Rs 3641 quintal for the sugar mills in the state of Punjab. This cost is calculated considering the subsidy of Rs. 35/- per quintal of sugarcane given by the Punjab government. The average selling price is Rs. 3475/-. Thus at this cost of production, the respective sugar mills are operating at a loss, it pointed out.

Referring to the recovery of sugar in Punjab for the crushing season 2021-22, the association said, it was 9.58% compared to the recoveries in the state of U.P., Maharashtra, Karnataka which varies from 11.40% to 11.47%. This makes the cost of production lower in those states as compared to Punjab, the association pointed out.

According to the association for 2022-23, FRP was increased from Rs. 295/- to Rs. 305/- by the Govt of India at the rate of 10.25% recovery. The states of Maharashtra, Karnataka, Andhra Pradesh, Telangana and Gujarat will pay FRP of Rs. 305/- per quintal @ 10.25% as compared to Punjab where SAP is Rs. 360/- per quintal. This accumulates to a difference of Rs. 55/- per quintal of sugar cane and Rs. 78/- per quintal on recovery basis.

This, the association pointed out, makes crushing and sugar manufacturing financially an impossible proposition in Punjab. If the government cannot step in, the private sugar mills will have no option but to lock their mills, it added.

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