INDIA BUSINESS WORLD - DECEMBER 16th - DECEMBER 31st
- 2007
ALLAHABAD HIGH COURT TELLS UP GOVT TO REWORK CANE SAP, GIVES RELIEF TO SUGAR MILLS
In a major shot in the arm to the beleaguered sugar industry in the state, the Allahabad High Court, according to unconfirmed reports, has ordered the UP government to scrap the state advisory price (SAP) fixed by it for purchase of sugarcane. The high court has asked the government to rework the SAP and suggested that a committee which has all stakeholders i.e. cane farmers, mill owners, consumers and the government nominee, be formed, to arrive at a fresh SAP.
According to reports, the high court has stated that the SAP of Rs 125 per quintal fixed for 2006-07 be scrapped as it was not arrived at by following the guidelines laid down by the Supreme Court. Also, the high court order, which was not available till the time of going to press, said that no action be taken against sugar mills which have accumulated arrears. It further said the mills would not claim refund of payments already made but they should not be coerced by the state government to make further payments at the current SAP. The order has come on a petition filled against the SAP fixed by the previous Mulayam Singh Yadav government for 2006-07. The Mayawati government on coming to power had also continued with the SAP of 2006-07 and kept it at the previous level of Rs 125 per quintal.
However, this was challenged in another case before the Lucknow bench of the high court. The Lucknow bench had in November directed that sugar mills be allowed to purchase cane at Rs 110 per quintal as an interim measure.
The Allahabad High Court order has brought much relief to the sugar industry, which has been grappling with the rise in prices of sugarcane and fall in the prices of sugar.
UP is among the few states which does not follow the SMP (statutory minimum price) fixed by the Centre. The central government's SMP is Rs 81.80 per quintal.
Simbhaoli Sugar Mills director Ram Sharma said the High Court order has come as a shot in the arm for the industry. He said the price of sugar in the market was Rs 1,250 per quintal whereas the conversion cost of sugar was about Rs 1,500 per quintal. "This was leading to losses of about Rs 250 per quintal and we were not in a position to even recover our costs," said Mr. Sharma.
Whether the sugar mill owners will have to follow the interim price fixed by the Lucknow Bench of the high court at Rs 110 per quintal, or the SMP would prevail over it was not clear, due to the court order not being available. But the sugar industry officials said that with the current SAP being scrapped, they hope for a better regime of administered price for sugarcane.
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