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Majority UP sugar mills start crushing operations

Nearly after a month of the first sugar mill in Uttar Pradesh starting crushing operations in the current 2014-15 season, 104 units have so far started functioning.

As per latest available data at the state sugarcane department here, 15 of the total 119 mills were yet to start.

In October, the state had directed mills to start operations by November 10 and 15 in the western UP and eastern UP regions respectively. However, the first private and cooperative mill could start only on November 10 and 14 respectively.

So far, mills have produced nearly 41 lakh quintal (LQ) of sugar after crushing 443 LQ of cane with sugar recovery standing at 9.06 percent. The mills have paid about Rs 33 crore to farmers towards cane dues for current season.

The sugarcane acreage has been estimated at over 2.13 million hectares (MH).

Meanwhile, the private sugar mills still have to clear arrears of about Rs 1,112 crore pertaining to 2013-14 season. Of the 95 private mills, 77 have settled 100 percent dues.

Besides, 23 cooperative and the lone UP State Sugar Corporation (UPSSC) unit had already settled their cent percent liabilities.

During 2013-14 crushing season, UP sugar output had dropped by 13 percent to about 642 LQ (6.42 million tonnes). During 2011-12 and 2012-13, UP sugar production had stood at 697 LQ and 740 LQ respectively.

This year, the government had retained sugar advised price (SAP) of cane at Rs 280/quintal. The mills had been allowed to pay Rs 240/quintal upfront. The remaining Rs 40/quintal should be paid within three months of the end of crushing season.

Of Rs 40/quintal, the government, akin to last year, would directly incur Rs 11.40/quintal as incentive to mills in form of cane societies commission (Rs 6.60/quintal), Rs 2/quintal (cane purchase tax) and Rs 2.80/quintal (sugar entry tax). The leftover of Rs 8.60/quintal would be given to mills after they had incurred this as payment to farmers.

For the remaining Rs 20/quintal, a high-level state committee would consider the average price of sugar and byproducts over a period of 8 months (Oct 2014-May 2015) to decide on sharing of payment liability.

UP has set the floor price of sugar (Rs 3,100/quintal), molasses (Rs 390/quintal), bagasse (Rs 167/quintal) and press mud (Rs 26/quintal). If the average price stays at this level, the mills would pay Rs 20/quintal.

If their market prices increase, the government could deduct it in the ratio from direct subsidy of Rs 8.60/quintal. If prices fall, the mills would be compensated in the proportional ratio in Rs 20/quintal.

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