Over seven million sugarcane farmers in Uttar Pradesh, the country’s second-largest sugar producing state, are weeks away from harvesting a small but rich crop. Mills buy sugarcane from them at a price advised by the state government. This year, they expect to be paid at least Rs 200 a quintal, up sharply from Rs 140 a quintal in the previous season.
The state government is busy meeting sugarcane farmers to assess their costs. It is expected to come out with the price some time in October. Mills will begin to crush came some time late October. Meanwhile, gur producers, who compete with the mills for sugarcane in the state, have started production. They are buying sugarcane from farmers at Rs 220 to 230 a quintal. This is a market-determined price and could well be the benchmark for the state government.
Gur prices, of course, are ruling high. This will lead to higher demand from these units. As a result, industry experts said, mills are certain to enter an aggressive price war among themselves as well as with the gur producers to ensure they get enough sugarcane for crushing. Some mills are learnt to have already made advance payments to large farmers.
“Gur producers are ready to pay in advance Rs 230 a quintal. Since the festival season is round the corner and mills are unlikely to begin before mid-October, I will try to sell as much as possible to the gur units,” said Satish Chand, a farmer in Muzzafarnagar’s Mubarakpur Thingai village.
The area under sugarcane cultivation in Uttar Pradesh has fallen almost 20 per cent this season. The terms of trade, farmers felt, had moved against sugarcane because of the high procurement price for paddy and wheat. As a result, sugar prices have more than doubled in the last one year to over Rs 30 a kg. Mills have made huge profits and have indicated that they are willing to pay a higher price this time round.
Farmers cited another reason why the state-advised price needs to be raised: The higher cost of cultivation. Farmers in Western Uttar Pradesh said costs were up over 30 per cent, driven by the higher cost of farm labour. They attributed it to the higher wages paid under the National Rural Employment Guarantee Scheme. As a result, some farmer associations, led by the Kisan Mazdoor Sangathan, have demanded as much as Rs 280 a quintal for their sugarcane.
The Uttar Pradesh Sugar Mills Association had requested the central and state governments to prevent gur units from operating before January 15. Clearly, their plea has fallen on deaf ears. Arun Khandelwal, the president of the Federation of Gur Traders, Muzaffarnagar, Asia’s largest gur market, however, said gur prices will come under pressure by December and lead to lesser diversion.
At the moment, the farmers feel like a pampered lot. However, there is palpable nervousness beneath the surface. With high state-advised price, the next crop could be huge in size. As this price is seldom rolled back, that could drain the financial resources of the mills. It could be a return to the days of huge payment arrears.
