Indian sugar mills association

Mills Crush Sugar Cane But UP

Date:	04 Nov 2011

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News ID:	650

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Lucknow: A new sugar cane crushing has begun and farmers are eager to sell their produce but the Uttar Pradesh government has not decided the State Advised Price (SAP) for cane for the 2011-12 season. The Mayawati cabinet, which met on Thursday, did not take up the issue and a decision on SAP is now likely next Tuesday.

While farmers are demanding a steep rise from last year`s SAP of Rs 205/quintal to Rs 275/quintal, mills have been opposing it saying they incurred a loss last year and would bleed again this season even if prices go up a tad.

Indian Sugar Mills Association director general Abinash Verma said mills could not afford to pay more than Rs 191/quintal if they have to survive while the ex-mill sale price continues to languish at Rs 28/kg.

At last year`s SAP of Rs 205-210/quintal, the cost of production for millers in Uttar Pradesh works out to be Rs 29/kg while they cannot realise more than Rs 28/kg making a loss of Re 1 on each kilogram of the sweetener produced.

"Of course, we cannot expect a rollback in SAP from what it was last year but any price beyond Rs 210/quintal in the current season would bleed the industry and make crushing unviable," said Abinash Verma. He pointed out that mills would pay a higher price for cane only if domestic sugar prices increase which seemed unlikely.

Farmers said the input cost of cane production has increased substantially and they have demanded that SAP be increased to Rs 275-290/quintal. They added that Punjab has awarded a higher price and threatened to go on a protest if the price is not increased substantially.

But many farmers are now getting desperate to sell cane so that they clear their fields for sowing rabi crops, wheat in particular. In western Uttar Pradesh, many have sold their produce to local jaggery producers.

About a dozen sugar mills have begun cane crushing promising farmers to pay SAP as and when it is announced.

With the state going to the polls in the next few months, millers say the government will raise the SAP to woo farmers. The Mayawati government has been eyeing the 40 lakh cane farmers in the state and effecting a hefty increase in SAP for the last two years. There is an estimate that there could be a 15-20% hike in SAP this year.

Last year, the SAP was raised by Rs 40 taking it from Rs 165/quintal to Rs 205/quintal

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