Maharashtra factories asking for transport subsidies akin to protectionism, UP sugar industry says

“Not only will the sale of sugar to UP suffer, but the payment of the price of cane to millions of farmers will be compromised,” the letter said. A unilateral incentive or discount will vitiate market dynamics and the major sugar-producing states will have a great disadvantage, he said.

As Maharashtra reflects on the state sugar industry’s request to give mills a transportation subsidy of £ 1,500 per tonne for sales outside its borders, the Uttar Pradesh sugar industry said such a move could disrupt trade in the country.

CB Patodia, President of the Uttar Pradesh Sugar Mills Association, wrote to the Secretary, Food and Public Distribution, that sugar is an essential commodity sold freely without trade barriers between sugar-producing and consuming states, and that transport subsidy would provide an unfair advantage to Maharashtra.

“Not only will the sale of sugar to UP suffer, but the payment of the price of cane to millions of farmers will be compromised,” the letter said. A unilateral incentive or discount will vitiate market dynamics and the major sugar-producing states will have a great disadvantage, he said.

The letter stated that sugar is a very price sensitive product and that the transportation cost component in the overall price determines market acceptance and the geographic location of the buyer. Traditionally, UP’s sweets sell their products in the east and northeast of the country. “Over a period of three to five years, production volumes have increased in the state, while sugar consumption has not changed much. As a net sugar surplus state, it is UP’s responsibility to sell its sugar outside and into its traditional markets, ”he said.

The letter said it was also asking the UP government to offer a similar discount / incentive to state sweets so that they can survive in the market.

“In a free market system, where sugar flows freely across the country, what is the need to protect its products? Second, Maharashtra should look at the markets in which it has traditionally done business and which are geographically closer to it. Why do Maharashtra sugar factories want to increase their transport costs? What is the logic of going to distant markets, for which they ask for subsidies? The letter asked.

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Rachel J. Bradford