Sugar Mills to Prolong Shutdown in India’s Uttar Pradesh on Cane
November 30, 2013 Leave a comment
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 pparija@bloomberg.net; Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net
About bambooinnovator
Bamboo Innovator 