Punjab govt forms panel to explore ways to help private sugar mills

  • Gurpreet Singh Nibber, Hindustan Times, Chandigarh
  • Updated: Sep 03, 2015 21:39 IST

The Punjab government has constituted a committee to resolve the issues faced by the sugar industry in the state after high-profile owners of private sugar mills had announced that they would not operate their units in the upcoming crushing season starting from November if the Badal regime does not intervene.

The committee, led by chief secretary Sarvesh Kaushal with financial commissioners - development, finance, taxation and cooperation - as members, met on Wednesday and invited the owners of private sugar mills for discussion.

The announcement by seven mills last month led to a crisis-like situation since 70% sugarcane is crushed by private millers in the state.
Owners of the sugar mills, including Kamal Oswal, industrial adviser to the state government with cabinet minister-rank and who owns mills in Amloh, met financial commissioner (cooperation) SK Sandhu along with other mill owners and conveyed their decision.

A memorandum signed by Markfed chairman Jarnail Singh Wahid, who owns a sugar mill in Phagwara and is the president of Punjab Private Sugar Mills Association, was also given to the state government in which it was said the sugar industry is facing unprecedented financial crisis due to unreasonable high sugarcane prices and non-existent linkage between the prices of sugarcane and sugar.

They maintain that continuous losses have eroded the financial health of sugar mills and it is difficult to operate the mills. The millers say they are even unable to make payment of sugarcane to farmers.

Out of a total of 16 sugar mills in Punjab, nine are run under cooperative model while seven located in Amloh, Phagwara, Buttar, Dhuri, Mukerian, Keeri Afgana and Dasuya are privately run (see box who owns which mill). Seven mills have already shut in the state.

The private mills owners who owe `213 crore to farmers are demanding subsidy from the state government. They are demanding that their dues be cleared as the government is helping the cooperative mills and clearing their dues.

Financial commissioner (cooperation) SK Sandhu said while sugarcane prices are high sugar is cheaper and it needs to be looked into seriously.

He informed that fixed remunerative price (FRP) as recommended by the Ranga Rajan Committee is Rs 220 per quintal and sugarcane is sold to mills on state advice price (SAP) which is Rs 295 per quintal.

"Sugar is sold at rs 2,500 per quintal and the cost of producing one quintal sugar is Rs 3100 quintal. So it makes no business sense," he adds.

On insisted by private mill owners, on March 25, the last day of the budget session, a bill for imposition of entry tax on sugar coming from outside states was moved, though deferred at that time, two months later the state council of ministers decided to impose 11% entry tax on sugar imported from outside the state. Millers say entry tax is not helping as much sugar is smuggled into state illegally.

As a consequence procurement of sugarcane which is cultivated over 2.45 lakh acres in the current season would suffer. Punjab's annual sugar consumption is 80 lakh quintals out of which 45 lakh quintals is manufactured by private sugar mills, 16 lakh quintals by manufactured the cooperative mills and 20 lakh quintals is imported from outside the state.

`90 crore dues of cooperative mills cleared: The state government today cleared Rs 90 crore which the cooperative mills owe farmers. "All the dues of cooperative mils have been cleared with the last instalment," financial commissioner development Suresh Kumar told HT. Speaking about `213 crore which private mills owe sugarcane farmers, he said the state government can't clear the dues of the past but can work out better plans for future.

Who owns which mill -

" DP Yadav of UP - Mukerian and Dhuri
" Rana Sugar (owned by family Rana Gurjeet Singh's who is congress MLA) - Baba Bakala
" Rajinder Chadha (Wave group) - Dasuya
" Another family member of Chadha family - Keeri Afgana
" Jarnail Singh Wahid (Chairman Markfed) - Phagwara
" Oswal group (Kamal Oswal - advisor to govt with cabinet rank) - Amloh

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