The apex sugar cooperative federation NFCSF has estimated that sugar production in the country next year   would be 24.5 million tonnes a little less than the current year’s production of 26 million tonnes.

The NFCSF Managing Director Vinay Kumar made the estimate public while talking with reporters in the capital.

However, Indian Sugar Mills Association (ISMA) had earlier calculated sugar output for the marketing year 2012-13 at 24 million tonnes. The sugar body said its estimate factored in a possible fall in sugar production due to a reduced precipitation.

According to the cooperative body, sugar output in Uttar Pradesh, the country’s second biggest sugar producing state, is estimated to rise to 8 million tonnes from 7 million tonnes in the review period.

Production in Karnataka is expected to decline to 3 million tonne on 2012-13 from 3.8 million tonnes this year due to less rains. Inspite of all this, India would have export surplus of 2 million tonnes for the next year, the sugar association noted.

The performance of the cooperative sugar mills in Haryana has been remarkable by any standards in 2011-12. They have paid Rs. 716.47 crore to the sugarcane farmers so far.

According to an estimate, the ten sugar mills have paid the aforesaid amount for a total of 316 lakh quintals of sugarcane.

Sources claim Haryana is the state that pays the highest sugarcane rates to farmers. The latter are paid as high as an amount of Rs. 231 per quintal for the first crop. Haryana ranks third in the country in terms of paying the cost of cane per quintal, sources add.

Sources also claim the present govt. in Haryana has spiked the cane price by a whopping amount of Rs. 114 per quintal over the last seven years. This has beaten all the previous records.

Haryana is beginning special programs for the development of cane farming. It has allocated more than Rs. 33 crore for the purpose in 2012-13.  The state govt is also planning to modernize and expand some of the sugar mills and establish co-generation power plants in PPP mode.

UP chief minister Akhilesh Yadav has said in no uncertain terms that the sugar cane cooperative societies are important and their views are taken into consideration while fixing mill wise areas in the state.

The principal work of the cooperative societies is to promote the interests of farmers and ensure supply from member farmers but laissez faire policy would mess up things.

Reiterating his firm commitment to uphold the interests of farmers, Mr Yadav said de-regulation of the cane sector would expose farmers to serious difficulties as sugar mills would no longer be subject to any control.

The sugar mills could exercise their freedom in a negative way and their procurement could be skewed, he cautioned.

Mr Yadav was airing his views after his meeting with Prime Minister’s Economic Advisory Council Chairman Mr Rangarajan in the capital.

The end of intervention in the cane sector would spell a fierce price competition and the sugar mills could take undue advantage of their crushing capacity, Mr Yadav noted.

While talking about the foreign trade in sugar, Mr Yadav called for extension of special facilities to the mills of North India as they are far away from the sea ports.

The crisis of cooperative sugar mills has quickly developed into a big political issue in Uttrakhand.

BJP members of the state assembly have begun protesting the closure of a sugar mill and imposition of PPP model on the remaining sugar manufacturing units in the state.

While the govt defends its decision invoking the principle of economic viability, the opposition dubs it a sellout.

Sources say chief minister Bahuguna intends having talks with the opposition on the issue for an urgent resolution of the crisis.

The sudden closure of a cooperative sugar mill and infliction of PPP model on the remaining sugar mills in Uttrakhand has roiled politics in the state. The state BJP is incensed over the decision and has charged the Bahuguna govt with a sell-out.

The BJP has expressed fear that the secret deal the govt has entered into with businessmen would have the twin effects of profiting some politicians of the ruling party and forcing thousands of workers to face redundancy.

The party maintains that it does not oppose PPP model as such as it could be useful in the field of infrastructure. But its application in the case of sugar mills does not stand scrutiny, the party asserts.

Sources say the BJP leaders and workers have already started protesting the govt decision through meetings and demonstrations. They have also threatened to begin a state wide movement against the govt, the sources add.

Earlier Chief Minister had promised to discuss the issue with the BJP leaders but his sudden departure for Delhi has left the opposition party wondering if there is something seriously fishy about the deal.

If cooperatives and cooperative leaders do not mend ways, days are not far when they would lose sympathy from all quarters. The case in point is Uttrakhand sugar mills run by cooperatives.

Performing dismally year after year five cooperative sector sugar mills in Uttrakhand have been allotted to Public Private Partnership scheme. Loss of cooperative is gain of PPP model.

On Wednesday the State government decided to close Gadarpur sugarmill on the grounds of economic unviability. The four other sugarmills, till now under cooperatives, were decided to be run on PPP model to improve their financial condition.

The decision to this effect was taken during a meeting of state cabinet chaired by Chief Minister Vijay Bahuguna, Chief Secretary Alok Kumar Jain told reporters.

There are six sugarmills in cooperative and government sector in the state besides four private sugarmills.

The state government had to bail out these five out of six sugarmills from its budget every year and now the government took the decision on the basis of the recommendations of National Sugar Federation, Jain said.

Regarding Gadarpur sugarmill, which was in cooperative sector, Jain said the mill had lost nearly 80 to 90 per cent of the sugarcane area after it became the part of separate hill state and it is economically unviable to run the mill.

He said the cabinet has also decided to use the assets of the mill for paying dues of the sugarcane farmers and transfer its 150 acres of land to State Industrial Development Corporation of Uttarakhand Limited (SIDCUL).

However, Bajpur sugarmill would not be affected by the government’s decision as its financial condition is good due to operation of a distillery from its compound besides sugarcane crushing, he said.

Jain said the sugarcane area of the mill would be diverted to other sugarmills and its 600 permanent and seasonal workers would also be shifted to other mills. He, however, said in case any worker does not want to be shifted to other places, he would be provided an opportunity to take the advantage of Voluntary Retirement Scheme.

Other four sugarmills– Doiwala, Kichcha, Nadehi and Sitarganj, would be run under PPP mode for which they would be leased out to private companies for 25 to 30 years with the condition that they have to retain all the workers of the mills, Jain said.

The court intervenes when government fails- seems to have become norm of Indian life. The sugarcane farmers finally got reprieve when the Punjab High Court ordered payment to them to the tune of Rs 100 cores by the mill owners who had received sugarcane from them earlier.

Eight sugar mills owed them this amount towards the last year payment. High Court was so stern that it called for sale of these mills if they fail to pay by August 9.

These mills are Gurdaspur Cooperative Sugar Mill, Batala Cooperative Sugar Mill, Bhogpur Cooperative Sugar Mill , Nakodar  Cooperative Sugar Mill , Fazilka Cooperative Sugar Mill , Budewal Cooperative Sugar Mill, Ajnala Cooperative Sugar Mill and Morinda Cooperative Sugar Mill.

The payment is to be made before Sugarcane commissioner. The secretary, cooperative department has been directed by the High Court to ensure payment of balanced amount to farmers.

How the government function is interesting to know especially in mattes of levy sugar. Sugar mill has to give 10 percentsugar  to govt as levy quota at a rate of Rs 19-20, though the market rate is Rs30-32.

Interestingly, government is neither lifting this sugar from the mills nor allowing sugar mills to reduce the quota resulting into stockpiling of huge sugar at the mills. Sugar cooperatives are major sources of sugar in the country.

However, on Friday a top Ministry official of the rank of food secretary hinted at reducing the quantity of sugar that mills need to contribute for supply through ration shops in 2012-13 after assessing the production situation.

In a representation made to the Food Ministry recently, the sugar industry contended that there is a case for a cut in levy sugar quota as the government has not been able to lift the entire quota in the last few years and consequently the carry forward stock has increased to 21 lakh tonnes for the 2011-12 marketing year.

Though the annual PDS demand for sugar is around 26 lakh tonnes, the average lifting by the state governments has been only 16 lakh tonnes in the last six years, they said.

The sugar industry has been demanding levy sugar quota to be reduced to 5 per cent in 2011-12 marketing year to save their inventory costs.

The government of India has increased sugarcane price by a whopping 17 percent.  That is to say, sugar mills would pay to farmers Rs 170 a quintal for 2012-13.

The Commission for Agricultural Costs and Prices had earlier recommended an increase in sugarcane price.

Sources say what with increasing production costs and a general weakening of the rural economy, the sugarcane farmers deserved a better deal.

The FRP, the minimum price that sugarcane farmers are legally guaranteed, for the ongoing marketing year stands at Rs 145 per quintal.

The FRP is the sugarcane price fixed by the Centre but there are some states like Uttar Pradesh and Tamil Nadu which announce their own rate called state advisory price (SAP).

The SAP is higher than the FRP. In Uttar Pradesh, for example, the SAP for the current year stands at Rs 250 per quintal, compared to Centre’s FRP of Rs 145 a quintal.

Usually, the government accepts the cane price recommended by the CACP.

Sources add India has had a bumper sugarcane production in 2011-12 and has emerged as one of the leading sugar exporting countries on the global market. There is general agreement that India’s capacity to supply the world with sweetener has continuously been on an upward trend.

The govt. of India has put more sugar for sale through PDSs and open market during the July-Sept quartet than it did in the in the
same period earlier. The total amount of sugar released for sale works out to about 5 million tonnes. The April-June period had also about the same amount of sugar for sale.

Official sources say the sugar factories would sell at least 25 percent of their quota in each month of the quarter. They could sell the remaining 25 percent as per their commercial calculations. The whole exercise of the quarterly sale of sugar has been undertaken in response to overproduction of sugar in 2011-12. so as to keep retail prices stable.

The govt. has decided to export about 3 million tonnes of sugar this year as sugar production is being estimated to count 26 million tonnes against the domestic demand of 22 million tonnes. However, various sugar associations have been campaigning for deregulation of the sugar sector as well as for abolishment of monthly release mechanism and levy obligation.

Sugar industry sources say low precipitation this year has affected sugar production.  There is   apprehension that the production is likely to fall by a million tonnes. That is to say, the country would be able to have only 25 million tonnes of sugar this year.

Maharashtra and Karnataka are the two leading sugar producing states in the country but low rain has forced them to report reduced production.

However, there is good news that Uttar Pradesh another major sugar producing state is expected to keep up its level of sugar production.

According to official estimates, as there has been planting of sugarcane on a much bigger arcrage this year across the country, there would be no problem meeting the domestic demands for the commodity.