Sugar Mills to Prolong Shutdown in India’s Uttar Pradesh on Cane

Sugar Mills to Prolong Shutdown in India’s Uttar Pradesh on Cane

Sugar mills in Uttar Pradesh, India’s biggest growing state, will extend a shutdown to prevent losses from widening as a dispute over pricing of cane continues, potentially reducing the country’s output, a millers’ group said. Factories will remain shut as the mills can only pay 225 rupees ($3.60) per 100 kilograms (220 pounds) of cane, compared with the state-set price of 280 rupees, Abinash Verma, director general of the Indian Sugar Mills Association, told reporters in New Delhi today. India ranks second globally among sugar producers after Brazil.The government may take legal action against the sugar makers if they don’t start crushing as late as Dec. 7, Rahul Bhatnagar, principal secretary for sugar in Uttar Pradesh, said by phone.

“Sugar cane is a perishable commodity, and millers can’t say no to crushing cane when it is in the field,” he said in an interview. “As per law, we can force them to crush. Where will the farmers take the sugar cane? It can’t be stored like wheat or rice.”

Indian producers are squeezed by a rule that allows states to fix cane rates to aid earnings for about 50 million farmers, a powerful voting bloc. Sugar prices in India tumbled 14 percent in the past year, prompting factories in the top two producing states of Maharashtra and Uttar Pradesh, accounting for 62 percent of national output, to sell below cost. Futures in Mumbai fell last month to the lowest since March 2012.

It will cost mills an average of 36 rupees to produce 1 kilogram of sugar in Uttar Pradesh, while their average selling price at the factory gate is 29.5 rupees, the association’s Verma said.

The federal food ministry appealed to mills across the country to start crushing cane, Food Minister K.V. Thomas told reporters in New Delhi today. The government may use money from the Sugar Development Fund to provide subsidy on interest on loans secured by mills from banks, he said.

To contact the reporters on this story: Pratik Parija in New Delhi at; Prabhudatta Mishra in New Delhi at

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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