Increased prices set to boost sugarcane cultivation

Just a day after seven co-operative sugar factories of south Gujarat hiked the procurement prices of sugarcane, Valsad Sahakari Khedut Udyog Mandali Ltd too has announced a whopping increase in the sugarcane procurement prices.

The move by all the major sugarcane factories in south Gujarat to pay more per tonne prices of sugarcane, is likely to provide a boost to sugarcane cultivation in the region.

The prices were announced after the directors of Valsad sugar factory held a meeting on Sunday. The sugar factory will procure sugarcane at the rate of Rs 1,031 per tonne, compared with Rs 600 offered last year.

Arvind Patel, chairman, Valsad Sugar Factory, said, "We were not in a position to offer higher sugarcane prices last year, as we had a large stock of sugar. The sugar stock with us has reduced a great deal at present. The prices of sugar have also increased, which has enabled us to offer higher prices to our members."

"We were unable to meet the requirement as there was good crop of sugarcane in the last few years. We were permitted to sell only 60 per cent of the total sugar produce in the open market, while the remaining had to be sold to the government at subsidised rates. The price at which the government purchases sugar is almost Rs 500 less than the open market prices," he said.

"Because we have gone for expansion, the government has permitted us a free-sale of 80 per cent of the total sugar for the next five years. This has allowed us more flexibility and hence we have decided to offer higher sugarcane prices this year," Patel said.

Patel predicted that the hike in sugarcane prices would encourage farmers to increase it's plantation. "Because of the lower prices offered by sugar factories in the last couple of years, many farmers had turned away from sugarcane cultivation. But now that sugar factories are offering higher prices, we are hopeful that the farmers will again be attracted towards sugarcane cultivation. The coming five years will be very good for the sugarcane farmers as well as for the sugar factories," he added.

"As per the decision taken during the meeting on Saturday, Bardoli Sugar has fixed sugar-cane procurement price at Rs 1,141 per tonne from October to January.

"For the month of February, the price has been fixed at Rs 1,156. For the months of March and April, the prices have been fixed at Rs 1,171 and Rs 1,201, respectively," N B Gohil, managing director, Shri Khedut Sahakari Khand Udyog Mandai of Bardoli, said.

"The farmers will have to pay a Rs 15 deduction in these prices. This amount will be used equally for developing the link road, for the area welfare fund and for the golden jubilee celebrations of Bardoli Sugar, next year," he added.

There is a lot of difference in the prices offered by the various sugar factories. Gohil said, "The difference in prices is due to stock valuation.

"It is likely that some of the sugar factories had offered higher prices in the last year or the earlier years. So to even things up, they have offered lower prices this time. Administrative expenditure, interest, conversion rate, etc also play a crucial role in determining the production cost."