In a late night decision on Thursday, the country’s biggest sugar producing state, Uttar Pradesh, announced an increase in the sugarcane state advised price (SAP) by Rs 10 per quintal for the different varieties of the crop. The SAP is the price that mills must pay for the new crop. The state raised the cane price for the early maturing variety cane from Rs 315/quintal to Rs 325 per quintal for the crop year that began this month, while the price for the common variety cane has been raised from Rs 305 to Rs 315 per quintal. The central government’s floor price, known as the fair and remunerative price (FRP) for 2017-18, has been kept at Rs 255 per 100 kg. The announcement of the SAP has been pending for days and the government’s late night decision was in anticipation of the model code of conduct for local bodies’ polls that came into force on Friday.

The Yogi Aditya Nath government has set a target of producing almost 10 million tonne (MT) of sugar this year, which would be almost 15% higher to nearly 8.75 MT that the state produced last year. However, even after six months after the end of 2016-17 season, the sugar mills still owe more than Rs 900 crores as cane dues to the farmers, a major chunk being from a few private mills such as Modi, Simbhaoli and Bajaj groups. The Modi group is the biggest defaulter with Rs 380 cr cane dues, Bajaj owes Rs 218 cr while Simbhaoli group owes Rs 124 cr. The UP Cooperative sugar mills, too, owe around Rs 174 crore. Speaking to mediapersons here on Friday, the UP minister for sugarcane development and sugar industries Suresh Rana said that the total sugarcane payables for the last season touched Rs 25,386 crore and the current season will see almost Rs 30,000 crores being paid to the farmers as cane price. He also said that the government will ensure by the time the season ends in April, there are no carryover sugarcane dues.
Speaking to FE, representatives of most mills said that the increase in the cane price in Uttar Pradesh this year is moderate and they hoped they would be able to clear the cane payments well within time.

Welcoming the decision of a reasonable hike in SAP for sugarcane, Vijay S Banka, chief financial officer of Dwarikesh Sugar Industries said, “It is a win-win situation for the farmers, sugar mills as well as for other industry stakeholders.” He added, “We feel that the SAP fixed by the Uttar Pradesh government is reasonable and can be absorbed by the sugar industry.” According to industry experts, a reasonably good monsoon this year and large-scale plantings of high-yielding cane varieties would help mills churn out more sugar, eliminating the need to import sugar. In turn, the higher volumes will also help sugar companies generate more revenues from allied activities such as electricity generation. “With sugar prices expected to remain steady, higher volumes will help enable the industry to absorb the hike in sugarcane price,” added Banka. However, farmer leaders appeared disappointed with the miniscule increase and alleged that the state government was hand-in-gloves with the industry.