Want fields vacated for sowing wheat; sell to khandsari and gur units, as mills wait for court to clear the cane price.
At a time when sugar output in India is estimated to be marginally higher than consumption, farmers in western Uttar Pradesh are selling the early variety of cane to jaggery and khandsari units at Rs 25-35 a quintal less than the State Advised Price (SAP).
Sugar mills have not yet set up cane procurement centres, resulting in farmers selling cane to khandsari and jaggery units at Rs 170-180 per qtl against the SAP of Rs 205 per qtl for the early variety. Nor are the mills to blame: they are waiting for the final cane prices to be cleared by the Allahabad High Court, probably next week.
According to the chairman of the UP Cooperative Cane Society, Manish Kumar Singh, the recent spell of rain has forced farmers to sell cane early, as this is the right time to sow wheat. Farmers with strong financial backing are holding cane for supplying to sugar mills, while small farmers require land to be vacated for wheat planting.
Last year, the average cane price was Rs 265 a qtl, much higher than the SAP of Rs 165 a qtl. For the current season, however, the Centre announced its ‘Fair and Remunerative Price (FRP)’ of Rs 139.12 a qtl for the 2010-11 crop season, seven per cent higher than the Rs 129.84 a qtl in the previous season.
The Indian Sugar Mills Association (Isma) has said payment beyond Rs 175 per qtl for cane would push their members into financial trouble. Its head, Vivek Saraogi, denied any distress sale of cane in UP, saying, “Nothing unusual is happening in the state.”
Ahead of the Allahabad HC’s decision on the UP government’s jurisdiction over cane prices when the Centre also declares one, sugar mills had started paying farmers at Rs 205 per qtl for the early variety.
But mills have slowed procurement in the state due to uncertainty over cane prices. Despite a warning from state chief minister Mayawati, only 73 of the 131 sugar mills in the state have started crushing so far, despite a November 15 deadline.
Even mills which had started crushing are going slow. According to millers, the recovery from cane right now is very low and it is not in their interest to start operations fully. Most mills which had started operations are complaining of a recovery from cane as low as nine per cent.
Since jaggery prices have declined to Rs 21-22 a kg, payment for cane beyond Rs 170 will be also uneconomical for kolhus (jaggery-making units). And, they are paying only what they can afford. Jaggery units are mostly from the unorganised sector and, therefore, are not regulated. Hence, no SAP or no other regulation can be forced on them, said B J Maheshwari, Director of Dwarikesh Sugar Industries.
On the other hand, wealthier cane farmers want a bonus payment as they got in the last crushing season. “We want bonus and incentive over the SAP like last year, when the cane price had breached Rs 300/qtl,” said the president of the Association of Cane Societies in Uttar Pradesh, Awadesh Mishra. He asked farmers to hold back on cane harvesting till the prices improved. “We have written letters to the prime minister, Congress president Sonia Gandhi and AICC member Rahul Gandhi on the cane issue. We want the Centre to amend its faulty FRP calculation mechanism,” he said.
Last year, UP had produced 5,2 million tonnes of sugar. This year’s estimate was 6.32 mt, cut to 6.1 mt due to crop damage from floods. India’s sugar output is estimated this season at 25 mt, against the consumption of 23.5 mt.
With contributions from Siddharth Kalhans & Virendra Singh Rawat
