Cane price lands on CACP's lap

The government has sought the opinion of the Commission for Agricultural Costs and Prices (CACP) on the sugar industry's plea for reconsidering the 8.5 per cent recovery level as the base for computing the statutory minimum price (SMP) of sugarcane.

The industry wants this base to be raised to 9 per cent or higher as the average recovery of most sugar factories usually exceeds that level.

The industry feels the country should be divided into tropical and sub-tropical zones for the purpose of fixing SMP. Cane yield and cane production costs differed in the two growing zones.

According to food and public distribution secretary S. K. Tuteja, the government had fixed the cane price for the new sugar season at Rs 73 a quintal linked to the basic recovery of 8.5 per cent as per the recommendation of the CACP.

" CACP is an expert body and the government has no intention to interfere with its recommendations", he told Business Standard.

"The government suggested to the industry to approach the CACP on this issue though we have also sought clarifications from the CACP where the aspects like actual recovery were taken into account while making the price recommendation", he said. The CACP's response was still awaited.

Tuteja ruled out any role for the Centre in the current stand-off between the Uttar Pradesh government and the state's sugar mills over the payment of cane price arrears based on the state-advised price (SAP), rather than the SMP.

He said the Supreme Court had upheld the U.P government's right to fix SAP because the state had a specific legislation for this purpose.

The sugar industry in response planned to take the matter to court once again. The industry will challenge the state government's right to enforce SAP with retrospective effect. SAP was fixed by the government around May. Industry has been asked to pay the SAP to cane growers for the previous sugar season as well.