Ending a week-long impasse over cane prices, private sugar mill owners in Uttar Pradesh have agreed to start crushing at the rate of Rs 280 per quintal, but said that the present pricing is “unviable”.

“Sugar industry of Uttar Pradesh at the initiative of the Chief Minister and in the larger interest of lakhs of farmers announced commencement of crushing operation for session 2013-14, despite operations being unviable at the present cane pricing,” UP Sugar Mills Association Secretary Deepak Guptara said in a statement.

Announcing tax breaks to end the impasse in the sugar industry, Uttar Pradesh government on November 28 warned sugar mills of legal action if they did not start operations by next week.

Earlier in the day, state Chief Secretary Javed Usmani told reporters that setting aside their demand of not paying more than at the rate of Rs 225 per quintal, sugar mills have agreed on the State Advisory Price of Rs 280 per quintal and have promised to start crushing from tomorrow. Millers have agreed to make payment for sugarcane in two tranches – Rs 260 in the scheduled minimum time and Rs 20 at the end of the session.

Most of the 99 private mills out of state’s 122 units had earlier refused to start sugarcane crushing from October as they found the Rs 280 per quintal price set by state government as unviable, prompting even Centre to consider a financial bailout package for the industry.

Usmani said mills have requested the government that they were ready to pay Rs 260 per quintal in the scheduled minimum time, but in the wake of drop in sugar price, remaining Rs 20 would be paid at the end of the season. The state government has accepted the demands.