The second half of October is going to be the most important time for the sugar sector in Uttar Pradesh.
This period would decide the future of the UP sugar industry and cane farmers. While the fate of the government sugar mills put on block for privatisation would be sealed, the State Advised Price (SAP) of cane for the 2009-10 crushing season is also due during this time.
If SAP is remunerative to farmers, a better crop could be expected next year, while if it pinches the industry, their profitability and expansion plans could be jeopardised.
The sector has been facing several challenges in past few years resulting in low acreage due to disenchantment of cane farmers, who also have the option of more remunerative prices for competing crops, notably food grain.
As per official statistics, the cane area declined from 2.8 million hectares in 2007-08 to 1.79 million hectares in the current crushing season. The cane availability also came down from 160 million tonnes in 2007-08 to 98 million tonnes this year.
Now, while the industry is willing to pay farmers in the region of Rs 170 per quintal, the latter are demanding no less than Rs 280 per quintal, citing rising input costs and huge profits made by mills due to high sugar prices and trade in sugar byproducts.
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Recently, UP cane commissioner Sudhir M Bobde submitted his report to chief secretary Atul Kumar Gupta regarding SAP, which was followed by a marathon meeting with all the stake holders, including farmers, industry and experts.
The SAP, which will be first cleared by the state cabinet, is likely to be around Rs 180-185. The Minimum Support Price (MSP) announced by the Centre is Rs 107 per quintal this year.