Farmers in Uttar Pradesh are selling sugarcane to jaggery makers below last year’s state-advised price (SAP) as the state government is yet to announce the new price for 2015-16 while sugar mills also plan to delay crushing.

Jaggery makers are paying between Rs 190 per quintal and Rs 200 per quintal for cane as mills are yet to begin crushing, said Arun Khandelwal, president of gur traders federation in Muzzafarnagar, UP.

This selling price is 32 per cent lower than SAP of Rs 280 per quintal received by farmers in the 2014-15 season (October-September).

Since jaggery is being sold around Rs 2,600 per quintal in the wholesale market, the sugarcane price is justified at current level, he said. “Farmers who need immediate cash are selling cane to jaggery makers as sugar mills are yet to start their factories,” Khandelwal said. “Farmers also need cash flow and they can’t wait when some of them are yet to receive payments for cane sold last year,” he remarked.

Mills in the state owe around Rs 3,000 crore to sugarcane farmers from the purchases made in the 2014-15 season, according to the UP Sugar Mills Association (UPSMA) data.

“Sugar mills are in the process of completing the cleaning procedure before starting crushing,” said Deepak Guptara, UPSMA secretary. “We expect crushing to start by end of this month and by that time the state government should also declare SAP,” he said. As ex-mill prices of sweetener dropped to around Rs 25-26 a kg this year, sugar firms fail to make payment to farmers in time leading to arrears.

Mills in UP are also facing financial crunch due to low realisation from sugar and there may be a slight delay in crushing, which normally starts around November 20, he said. Until 2009, SAP was announced in October, but it started getting delayed as sugarcane prices became an issue for political parties.

For the past three years, UP has not raised the sugarcane price. This year, the state is considering to raise SAP by Rs 10 per quintal as the Centre has also raised the fair and remunerative price by the same amount, sources said.

Once mills start crushing, bulk of the cane will go to them, Khandelwal said. The jaggery output is set to fall this year to about 8 million tonne from 9 million tonne last year as sugarcane crop has been affected by lower rainfall in Maharashtra, Karnataka and other states, he said.