UP government to announce sugarcane price on January 12

UP cane price announcement delayed by two months

After a delay of about two months, the state advised price (SAP) of sugarcane in Uttar Pradesh is expected to be announced by the Akhilesh Yadav government next week.

SAP is the floor price to be paid by sugar mills for procuring cane from farmers. While, the cane price for 2015-16 crushing season is yet to be announced, the same was announced on November 12, 2014 for the previous 2014-15 season.

The cane price is likely to be approved in the state Cabinet meeting on January 12, before being announced. The high level committee on cane pricing, headed by Chief Secretary Alok Ranjan, had already forwarded its recommendation to the Cabinet.

In all likelihood, the government is expected to keep the cane price of Rs 280 per quintal, largely unchanged.

The last time, SAP was hiked in UP in 2012-13, when it was increased by almost 17 per cent to Rs 280 per quintal for common variety, which forms the bulk of the cash crop. For the subsequent crushing seasons 2013-14 and 2014-15, the SAP level was retained.

A sugar industry official, on the condition of anonymity, said while the Centre had announced the fair and remunerative price (FRP) for cane almost a year in advance, in February 2015 for the 2015-16 crushing season, the state government had been dragging its feet on the issue.

FRP is the statutory price to be paid by sugar mills across the country. While some states like UP announce SAP to further remunerate farmers, this has been challenged in the Supreme Court as arbitrary.

UP accounts for nearly a fourth of India’s annual sugar production, however, the sector has been passing through difficult times in recent years due to issue pertaining to cane price, cane arrears, falling sugar price, etc.

Sugarcane arrears to the tune of over Rs 1,200 crore for the previous 2014-15 crushing season is still pending on mills and Allahabad High Court is hearing a case.

For the current season, the sugar mills have so far paid nearly Rs 700 crore to farmers against total dues of Rs 1,250 crore, UP cane commissioner Ajay Kumar Singh told Business Standard.

For current season, the farmers have demanded cane price of Rs 350 per quintal. However, private mills, which form nearly 80 per cent of the functional units in UP, had reiterated their paying capacity was only around Rs 200 per quintal due to low sugar prices and weak demand.

This season, 113 mills are participating in crushing operations, including 89, 23 and one belonging to private, cooperative and state sectors, respectively.

The sugar sector is not only economically vital for UP, it is a political hot potato, as about five million farmers’ households are directly associated with cane farming.

The sugar sector is estimated at about Rs 30,000 crore, spanning sugar and byproducts including molasses, ethanol, press mud, etc. Besides, sugarcane is used to produce jaggery (gur) and khandsari (unpolished sugar) in the unorganised market.