Cane prices continue to court trouble

The issue of cane prices in Uttar Pradesh continues to make headlines with multiple litigations pending in different courts.

In an interim order on February 27, 2008, the Supreme Court asked the sugar mills in UP to clear cane arrears for the 2006-07 crushing season within six weeks. The court fixed the prices at Rs 118 a quintal for the early cane varieties as against the state advised price (SAP) of Rs 130.

In an another case, in which the sugar mills had challenged the SAP announced by the UP government for 2007-08 season, the Allahabad High Court has reserved its interim observation. A similar case is pending with the Lucknow bench of the court. The hearing on the case is scheduled on March 18.

The state is the country's top sugarcane producer and the second largest sugar producer after Maharashtra and the issue of sugarcane payment figures prominently on the agenda of political parties.

The UP government announces SAP every year to be paid by the sugar producers to cane farmers, while the centre fixes the statutory minimum prize (SMP) every year. For the 2007-08 season, the state government announced an SAP of Rs 125 a quintal for the common variety, Rs 130 for the early variety and Rs 122.50 for the rejected variety.

The Lucknow bench passed an interim order on November 15, 2007, directing sugar mills to pay cane price at the rate of Rs 110 a quintal, against which about half a dozen special leave petitions are pending before the apex court.

The sugar mills have challenged the SAP mainly on the ground that no norms have been fixed by the state for fixing the price and thus the same is arbitrary.

According to sources, sugar mills in the western UP are facing shortage of sugarcane and sugar factories are not getting adequate sugarcane to meet their crushing capacity, perhaps due to non-payment of appropriate price and backlog arrears for previous years.

The SC on January 18, 2008 had stayed the final judgment of the Allahabad High Court dated December 19, 2007, and further modified the same recently on February 27, 2008.

Meanwhile, Deoria Cooperative Sugarcane Development Committee chairperson Neeraj Sahi told Business Standard that about 60 per cent of sugarcane crop was standing in the fields in Deoria district and the farmers were not enthusiastic about cultivating cane in the next season.