Why sugar business is not such a sweet affair in Punjab

  • Gurpreet Singh Nibber, Hindustan Times, Chandigarh
  • Updated: Aug 25, 2015 13:34 IST

The Punjab government is indecisive on giving incentive to private sugar millers, who process 70% of the sugarcane grown over about 2.45-lakh hectares in the state and have announced not to operate their units.

The issues of the sugar industry have taken a political hue in the state with the Congress planning a series of protests over these against the Akali-BJP government. Also large scale smuggling has defeated the business-stability purpose of Punjab’s new 11% entry tax on sugar.

State agencies have alleged that private millers have been for years using the same “arm-twisting tactic” and always going to work at the last moment. “Not this time,” Rana Inder Bir Singh, whose family owns one of seven private sugar mills in the Punjab, told HT. Of the 16 sugar mills in Punjab, nine are in the co-operative sector.

“We have exhausted our loss-bearing capacity and now we look to the government to pay Rs 220 crore that we owe to the sugarcane farmers,” said the miller.

“We have offered them loans, beyond which, the government can’t do much,” said Sugarfed managing director and special secretary (cooperation) Kanwalpreet Kaur Brar. “They must take this option,” she adds, though private millers deny that they have announced to shut the mills in the past. Refuting her claim, they ask Brar why the cooperative mills sell sugar below the market rate. “The government supports co-operative mills in spite of the massive bungling that goes on there,” said a private miller, adding that co-operative mills sold sugar for up to Rs 200 per quintal below the market rate, which required investigation.

Private mill owners say that if the state government can support co-operative mills by paying off their backlog dues to farmers, why can’t it bail out the private mills, when the business dynamics are the same. The state government has paid about Rs 300 crore to farmers against due payment from the co-operative mills and it expects to clear another Rs 90 crore now.

Tough times for business

Private millers are of the view of all the states, it’s toughest to make sugar in Punjab, because recovery as compared with Tamil Nadu, Karnataka, and Maharashtra is much less. “Recovery rate is 11.5% for these states, while 9.5% for Punjab,” said a miller. Also, the comparative sugarcane production in Punjab is two to three time less.

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