Diwali bonanza: Uttar Pradesh may raise SAP for sugarcane farmers

State utility clears Rs 1,361 cr pending dues to Bajaj Hindusthan Sugar

With elections round the corner, the sugar market is abuzz that Uttar Pradesh — one of the largest sugar producing states in the country — could raise the state advised price (SAP) of sugarcane by Rs 25-30 per quintal for the 2023-24 season, which started in October, to around Rs 380 for the early-sown varieties.

A similar hike could follow for other varieties as well. However, there hasn’t been any official confirmation on this.

UP, Uttarakhand, Haryana, Punjab and Karnataka are among states, which fix their own sugarcane purchase price on the basis of input costs, known as SAP. Other states follow fair and remunerative prices (FRP) as decided by the Centre on recommendation of the Commission for Agriculture Cost and Prices (CACP).

That apart, state-run Uttar Pradesh Power Corporation Limited has transferred Rs 1,361 crore to the escrow account set up to clear sugarcane dues of Bajaj Hindustan Sugar. These dues mostly accrue to the 2022-23 sugar season, which ended on September 30, 2023.

Back in 2021, ahead of the state elections, the UP government brought an amendment to the UP Sugarcane (Regulation of Supply and Purchase) – Second Amendment Act, 2021.

This empowered it to forfeit dues, loans or investment that any subsidiary or associate of a sugar manufacturing company had towards the state government, or any of its corporations, to clear outstanding sugarcane dues accruing to farmers.

An immediate fallout of the order is when the state government used Rs 1,000 crore, which it had to pay to Bajaj Group’s Lalitpur Power Generation Company Ltd. The amount was used to clear a portion of around Rs 2,300 crore sugarcane dues accruing to farmers from Bajaj Hindu­stan Sugar, another company of the group. The remaining portion of the dues was recently transferred 

to the escrow account created for the purpose to clear pending dues.

According to an official statement from the Uttar Pradesh government, the pending dues will be transferred to the bank accounts of all the sugarcane farmers associated with the Bajaj Group. This will come as a big relief to the over 500,000 sugarcane farmers associated with the group.

Meanwhile, on the SAP, sources said an increase of Rs 25-30 per quintal will be the highest since the 2021-22 sugar season, when prices were raised ahead of the state polls.

In Uttar Pradesh, there are three varieties of sugarcane — early, ordinary and rejected. The early variety constitutes over 95 per cent of the crop (in the state), followed by 2.7 per cent for the ordinary variety and the rejected variety constitutes barely 0.3 per cent.

In the 2022-23 sugar season, the  early variety constituted over 95 per cent of the crop (in the state), followed by 2.7 per cent for the ordinary variety and the rejected variety constituted barely 0.3 per cent.

In UP, around 4.5 million farmers are directly involved in growing sugarcane.