Lucknow: Farmers cheer state’s decision to fix SAP at R280 a quintal
In a major relief to farmers, Uttar Pradesh chief minister Akhilesh Yadav on Friday announced the much-awaited support price for sugarcane in the state, raising the floor price by a whopping 16% from R240 a quintal to R280 a quintal.
This is the price that sugar mills will have to pay the farmers for the crushing season that has already started.
It is also the highest price payable to the sugarcane farmers anywhere in the country, higher even than of Punjab, which has set the cane price at R240 a quintal, and also higher by a whopping R110 a quintal over the Centre’s R170 a quintal fair and remunerative price (FRP).
Announcing the state advised price (SAP) for sugarcane, Yadav said while the common variety of cane has been priced at R280 a quintal as against R240 last year, the SAP for the early variety crop — which comprises merely 10% of the cane production in the state — has been set at R290 per quintal as against last year's R250.
The rejected variety, which was priced at R235 per quintal last year has been raised to R275 this year. This marked an increase of R40 across all varieties.
The pricing was welcomed by farmers who termed it as “satisfactory”.
“Based on the input cost of the farmers, the expected cane price should have been a minimum R300 a quintal. However, taking into consideration other factors such as sugar production estimates of this year current sugar prices and cane prices in other states, the present price can be termed as satisfactory,” said Sudhir Panwar, president Kisan Jagriti Manch.
However, the hike has come as a blow to the industry, which had been lobbying for a hike of around R15-20.
“The massive increase of about R40 a quintal of sugarcane has come as a big surprise. As compared to R165 per quintal of SAP in 2009-10 season, the current price of R280 per quintal means an increase of 70% in three years. The sugar prices have improved by just about 15%. The neighbouring states of Haryana and Punjab have decided an SAP of around R240 a quintal, whereas Tamil Nadu has also announced of SAP of R225 a quintal only.
At R280 a quintal and about 9.2% sugar recovery, the average cost of production for UP mills would work out to R35-36 a kilo. “The current ex-mill prices of R32.50 a kilo, either needs to improve so that mills cover their costs to pay to the farmers or incur losses leading to cane price arrears and farmers shifting out of sugarcane in 2013-14 season,” said Shyam Lal Gupta, secretary, UPSMA, adding that this substantial increase in SAP without an equivalent improvement in sugar prices could reduce sugar production to such levels that domestic sugarcane and sugar production may fall substantially and India may have to import sugar sooner than expected.
“This is not in the interest of either the consumers or the farmers who would experience huge cane price arrears,” he said.
According to industry sources, the reason for the Akhilesh Yadav government announcing going for such high prices are purely political. “The Mayawati government, on the brink of a defining assembly election last year, had decided to play to the farmers' galleries and has raised the floor price of sugarcane by 19% from R205 a quintal to R240 per quintal,” said an expert.
“This government, too, has done the same so as to not fall out of grace with the farmers, without looking into the practical aspects of the issue. If this is the raise that the government is giving the farmers in its first year in office, what will it do when it nears elections? Questions the source, adding that only political gain has been taken into considerations while working out the SAP.”
“There is no difference between this government and the previous one. The effect on the sugar industry has not even been contemplated. The future is bleak. Arrears to build up and eventually farmers to suffer when the factories will fail to pay up the cane dues,” he said.