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Sugar coops agree to cut costs

By Mahesh Vijapurkar

MUMBAI OCT. 11. The Centre's willingness to allow the Maharashtra Government to borrow Rs. 947 crores from the open market to help sugar cooperatives pay the statutory minimum price for sugarcane is being seen as a belated gesture.However, it comes at a time when the industry is poised to record an all-time low in cane crushing — 375 lakh tonnes against last season's 535 lakh tonnes.

Even if the SMP were to be paid, the impact of other factors may barely help keep the industry afloat as not all the 151 sugar cooperatives are likely to crush beyond 70 per cent of their capacities. Add to this the diversion of immature cane to feed the cattle and the shift to other crops.

There are several `firsts' this year. A "strict directive" not to commence crushing from Dasserah but only from November 1 or later because of crop shortages has been expended with. Otherwise, each day would have by now seen VIPs ceremonially lighting boilers.

The State has, for the first time, told the Centre that the cooperatives were not in a position to pay the SMP.

Also, for the first time, the sugar barons have given personal guarantees that they will "behave".

In fact, when the Nationalist Congress Party chief, Sharad Pawar, the sector's political mentor, called upon them to give personal assurances that they would cut costs, entertainment, staff size and even wages by about 20 per cent, they readily obliged.

The Centre allowed the State to borrow, he told them, "came because I gave the Centre my personal guarantee that the sector will reform. You have to do your bit".

All the Chief Ministers, including Mr. Pawar, had always sought these assurances, but they never came. But now, the sector has realised that any deviation would mean "sudden death", as a sugar coop chief put it. "We need to avoid that or all of us sink without a trace."

Of the Rs. 947 crores that Maharashtra intends to raise from the open market, Rs. 622 crores would go towards paying the cane price and Rs. 325 crores for export subsidy.

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