Cane scarcity, improved sugar-realisation did the trick.
Scarcity of sugarcane and improved sugar realisation has prompted Uttar Pradesh sugar millers to make advance payment to cane farmers in the ongoing crushing season.
The sugar realisation has improved to about Rs 3,100/quintal compared to Rs 2,750/quintal two months ago following the Central government’s decision to allow sugar exports to the tune of 5,00,000 tonnes.
The sugar mills want to produce maximum sugar to reap the benefits of higher sugar prices and while there is sufficient cane supply to keep the crushing moving.
So far, the state millers had collectively paid nearly Rs 2,280 crore to sugarcane farmers against the dues of Rs 1,920 crore. There are about four million cane farmers in Uttar Pradesh, which is the highest sugarcane-yielding state in India and second largest sugar producer after Maharashtra.
The millers are proactively paying cane arrears to prevent diversion of cane to khandsari and gur units, and are encouraging farmers to supply the cash crop, a sugarcane official told Business Standard.
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Earlier, the Centre had allowed the sugar export to take advantage of high international sugar prices and support the domestic sugar sector in the backdrop of bumper sugar production estimated for 2010-11 and the resultant glut.
“The prompt payment to farmers is to ensure uninterrupted cane supply to the mills and check diversion of cane,” UP Sugar Mills Association (UPSMA) president C B Patodia said adding, the sugar prices were unlikely to rise any further.
He said, of the 5,00,000 tonnes export, UP millers’ share would come to only about 1,25,000 tonnes.
Till date, about 17.9 million tonnes cane have been crushed in UP producing nearly 1.57 million tonnes of sugar vis-à-vis the corresponding figures of 15.3 million tonnes and 1.32 million tonnes respectively during 2009-10. The sugar production target has been pegged at 6.1 million tonnes this year. Last year, Uttar Pradesh had produced 5.2 million tonnes of sugar. The annual state sugar consumption stands at five million tonnes.
During 2010-11, the state cane acreage and production have been estimated at 2.10 million hectares and 124 million tonnes respectively.
Meanwhile, 123 sugar mills have begun their crushing season in Uttar Pradesh. The crushing had a delayed start this season due to dispute over cane price and late rainfall, which resulted in higher moisture content in cane. The crushing gathered momentum after chief minister Mayawati issued a stern warning to the mills.
On November 2, Uttar Pradesh had announced a record hike of Rs 40/quintal in the State Advised Price (SAP) to Rs 205-Rs 210/quintal. The industry had expressed its inability to pay at this level. Later, the industry had approached the Allahabad High Court contending Uttar Pradesh had no power to fix the SAP after the fixation of fair and remunerative price by the Centre, which stood at Rs 139/quintal for 2010-11.