FRP-SAP gap amount: Price deficit burdened Punjab private sugar mill owners seek govt bailout

Private Sugar Mills Association demanded a clear-cut policy from government asking it to bear gap of ₹55 per quintal between FRP and SAP. There are 9 sugar mills in private sector

The owners of privately owned sugar mills in Punjab on Sunday announced that they are not in position to run their mills in the upcoming crushing season starting in November, if the state government doesn’t pay the deficit amount, resulting out of the gap in the Centre’s fair and remunerative price (FRP) of ₹305 and state advise price (SAP) of ₹360 per quintal on sugarcane.

There are nine sugar mills in the private sector and these mills owe ₹125 crore to farmers of the previous season. (HT file photo)

The Private Sugar Mills Association demanded a clear-cut policy from the state government, asking it to bear the gap of ₹55 per quintal between the FRP and the SAP. There are nine sugar mills in the private sector and these mills owe ₹125 crore to farmers of the previous season.

Seeking chief minister Bhagwant Mann’s intervention, the association urged that without state government support, they will not be in position to run operations for the reason that they are no longer in capacity to pay the deficit amount year-after-year.

It added that Punjab’s sugar millers were at a disadvantage as the recovery (from sugarcane) in Punjab was 9.58% as compared 10.9 to 11.47% in various other states such as Uttar Pradesh and Maharashtra. Recovery is the amount of sugar extracted from one quintal of sugarcane.

The association suggested that either the SAP should be re-fixed or an alternative subsidy be granted for difference of price between SAP and FRP.

Giving details, the association said, for the crushing season 2021-22, the state government had fixed SAP of ₹360 per quintal, whereas FRP was ₹295. The mills, it added, have suffered huge financial losses in the past crushing season, and all reserves have been wiped off.

The association said, for the current season, 2021-22, the total cost of production of sugar comes to about ₹3,641 quintal for the sugar mills in the state. This cost is calculated considering the subsidy of ₹35 per quintal of sugarcane given by the state government. The average selling price is ₹3,475, thus at this cost of production, the respective sugar mills are operating at a loss, said the association.

Referring to the recovery of sugar in Punjab for the crushing season 2021-22, the association said, it was 9.58% compared to the recoveries in the state of U.P., Maharashtra, Karnataka which varies from 11.40% to 11.47%. This makes the cost of production lower in those states as compared to Punjab, the association pointed out.