 "UP raises state price for sugarcane by Rs 20 per quintal for 2023-24 season")
With national elections round the corner, the Uttar Pradesh (UP) government has raised the state advised price (SAP) of all sugarcane varieties by Rs 20 per quintal for the 2023-24 (October 2023-September 2024) season to Rs 370 for early-sown varieties.
However, farmers in western UP, who have been demanding a hike in SAP, don’t seem to be too impressed, terming the hike as “inadequate.” “Though the hike is very inadequate and we were expecting the price to be raised to at least Rs 400 per quintal, hence, our fight for remunerative prices will continue. But we are ending the agitation for now,” Dharmendra Mallik, spokesperson for Bhartiya Kisan Union (apolitical), said.
UP is one of India’s largest sugarcane-producing states and has most private sugar mills. Of the total 120 sugar mills in UP, the private sector leads with 93 plants, followed by the cooperative sector with 24 units and UP State Sugar Corporation (UPSSC) with three.
Girishkumar Kadam, senior vice-president and group head — corporate ratings, ICRA Limited, said this increase is in line with the industry expectations. It will result in an increase of sugar production cost by Rs 1.7/kg, he added.
ICRA expects the profitability of sugar mills in UP to remain comfortable, given the firmed-up domestic sugar prices. They traded at Rs 38-38.5/kg as of December 2023, he said. Nearly 5 million farm households are directly associated with sugarcane farming in UP and cane byproducts. These include sugar, ethanol and molasses, among others, generating nearly Rs 50,000 crore for the state.
Thereby, it makes sugarcane farmers an important electorate for any political party in the state.
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“In UP, the SAP, which was earlier determined by input cost, is now dictated by election schedule. The state BJP government hiked sugarcane SAP in 2021 just before the Assembly elections. And now, it raised the price just before Parliamentary elections to influence the farmers vote,” professor Sudhir Panwar, a former member of UP Planning Commission, told Business Standard. He, too, termed the hike as insufficient as it won't cover the inflation during the last three years since 2021.
“Considering the inflation, the government has increased 19 per cent the dearness allowance of employees (4 per cent is expected soon) while the increase in sugarcane price is only 5.7 per cent. This rise (sugarcane price) is just not enough to cover inflation,” Panwar said.
Uttar Pradesh has three varieties of sugarcane — early, ordinary, and rejected. The first variety usually comprises over 95 per cent of the sugarcane cultivated (in the state), followed by 2.7 per cent for the ordinary variety and the rejected variety constitutes barely 0.3 per cent.
With the latest hike, SAP for sugarcane increased from Rs 350 per quintal to Rs 370 for early maturing varieties; from Rs 340 to Rs 360 for common varieties and from Rs 335 to Rs 355 for late maturing or unsuitable sugarcane varieties, said a senior government official.
UP sugarcane payments during the crushing season 2023-24 are expected to top Rs 36,000 crore. Last year, sugar production stood at nearly 10.7 million tonnes.
UP, Uttarakhand, Haryana, Punjab, and Karnataka are among states that fix their own sugarcane purchase price on the basis of input costs or SAP. Other states follow the fair and remunerative price decided by the Centre on the recommendation of the Commission for Agriculture Cost and Prices.
“Even after this hike, UP farmers will get Rs 16 per quintal lower than Haryana and Rs 21 per quintal less than Punjab farmers,” Panwar said.
SAP is usually more than the cane fair and remunerative price (FRP) for sugarcane announced every year by the Centre.
The BJP government in UP last raised the SAP by Rs 25 per quintal in 2021, ahead of the state elections, for the 2021-22 sugar season.
In 2023, the state government had kept the SAP unchanged for the 2022-23 crushing season.
“The Akhilesh Yadav government had increased sugarcane SAP by 26 per cent in five years while Yogi Adityanath government has raised it by 17.46 per cent in seven years,” Panwar said.