NEW DELHI/ PUNE: Sugarcane crushing in Uttar Pradesh and Maharashtra, the country's top two producing states, is likely to begin on time next month, according to millers and traders. 

"Sugarcane crushing will be on time this year. In Maharashtra, where the state government gave permission to start cutting by October 15, cane cutting has almost started and some mills are ready to fire the broilers," said Abinash Verma, director general of Indian Sugar Mills Association. "In Uttar Pradesh, cane crushing will begin after Diwali by November 20." 

Sugar prices have firmed up by Rs 2-3 a kg to Rs 25-27 a kg in wholesale market across the country in the last one month due to pickup in festival season demand, according to traders. India is the world's biggest consumer of the sweetener with annual consumption touching 25 million tonne. 

As per the agriculture ministry's first advance estimate released in September, sugarcane production this season has been pegged at 341.43 mt, down 7.93 mt from a year ago, mainly due to deficit rains in some states. ISMA has estimated sugar production in 2015-16 to be around 27 mt. 

 

In Maharashtra, sugarcane crushing has started in some sugar mills in drought-hit Solapur and Ahmednagar districts. The state is expected to crush 786 lakh tonne of cane and produce about 86 lakh tonne of sugar, down from 102 lakh tonne last year. 

Meanwhile, sugar mills in Uttar Pradesh—the biggest cane producing state in the country—said they are waiting for the state advised price (SAP) for cane this year. "We have still to pay arrears to farmers, but will do crushing on time. In the first week of November, the Uttar Pradesh government should announce the SAP price," said a spokesperson of a Mumbai-based business group that has mills in Uttar Pradesh. 

Industry executives said the Uttar Pradesh government may not raise cane price for 2015-16. 

"The sugar industry does not want to give SAP to farmers. Last year, UP gave the difference between fair and remunerative price (FRP) and SAP and we will like them to continue," said Verma. With international as well as domestic prices of sugar on the rise, private traders have already contracted about 90,000 tonne of white sugar for export. 

Sugar mill owners feel payment to farmers will continue to be a challenge this year. Sugarcane arrears, which had touched Rs 14,000 crore on August 31, had come down to Rs 9,000 crore on October 15. Of this, mills owe Rs 4,000 crore to farmers in Uttar Pradesh, industry executives said. Sugar millers in Maharashtra have said they will be able to pay the FRP only in installments, as was the practice prevailing in the state before the FRP law came into force. 

The mills are also awaiting resolution of an ongoing issue with payment hike for labourers and also on the stand taken by farmer leader and MP from Maharashtra, Raju Shetty. The latter is expected to announce his stand about cane price at a conference in Kolhapur on November 6.