Adityanath govt hikes sugarcane price by Rs 10 per quintal

Against cane price of Rs 305 per quintal for common variety, the SAP effective for the 2017-18 season now stands at Rs 315 per quintal

To keep the sugarcane farmers in good humour in run up to the Uttar Pradesh urban local bodies elections next month, the Yogi Adityanath government has hiked the state sugarcane price by Rs 10 per quintal for the ongoing 2017-18 crushing season.

With this hike, projected improved sugar recovery and higher cane acreage this season, the state government has estimated UP sugar output to touch 11 million tonnes (MT) and total farmers payables at almost Rs 30,000 crore.

The hike decision was taken last night and interestingly the model code of conduct came into force this evening after the state election commission announced the poll schedule for the state local bodies election.

The UP cane State Advised Price (SAP) has been hiked by Rs 10 per quintal for the different varieties of the crop even as the state sugar mills, especially private sector units, are saddled with arrears of over Rs 1,000 crore for the last crushing season.

Against the cane price of Rs 305 per quintal for common variety, the SAP for the 2017-18 season now stands at Rs 315 per quintal. Likewise the price of early maturing and unsuitable cane variety is now Rs 325 and Rs 310 per quintal respectively.

Almost 70 percent of the cane crop falls under common variety and thus forms the median price paid to farmers by mills.

Earlier, farmers’ bodies had demanded much higher level of sugar price citing rising cost of farm inputs even as the mills had expressed their inability to pay any steeper price given their purported tight liquidity and financial condition and projected fall in domestic retail sugar prices following higher output.

In this context, the Yogi government has treaded the middle path of marginal hike in cane price to keep the key stakeholders of mills and farmers in good humour.

The Yogi government has announced the cane price three weeks earlier as compared to the previous Akhilesh Yadav government, which had announced SAP on November 18, 2016 by effecting Rs 25 per quintal rise. However, the Yadav government had held on to the earlier SAP of Rs 280 per quintal for three successive years, before announcing the hike in the election year to keep farmers happy.

Sugarcane is a major cash crop in UP and currently accounts for roughly Rs 30,000 crore worth of direct economy. There are over 4 million rural households in UP engaged in its farming and sugarcane is politically sensitive issue, especially in western UP.

Meanwhile, Dwarikesh Sugar Industries whole time director and CFO Vijay S Banka has welcomed the “reasonable hike” in SAP and lauded the Yogi dispensation for creating a winning proposition for all the stakeholders.

“We feel that the SAP fixed by UP is reasonable and can be absorbed by sugar industry. We expect higher production this season and higher volume will help the companies to higher revenues from cogeneration and other segments. With sugar prices expected to remain steady, higher volumes will help enable the industry to absorb the hike is sugarcane price,” he underlined.

Last season, UP had clocked sugar output of about 8.75 MT and the total payables were to the tune of Rs 25,386 crore. This season, the UP sugarcane acreage is estimated at 22.99 lakh hectares (LH), up 11.20 percent of 2.45 LH, compared to 20.54 LH in 2016-17.

This year, the state sugarcane department had distributed 60 lakh quintals of high quality seed to farmers to improve productivity and sugar recovery.

By November end, all the sugar mills are likely to start crushing operations. Last year, 116 units had crushed sugarcane in UP. So far, about 32 mill in western UP are crushing cane.

Meanwhile, UP sugarcane development and sugar industries minister Suresh Rana claimed there would be no piling up of arrears this season due to stricter monitoring and structural changes, including the provision of a joint escrow account, under which 85 percent of the money received by mills on account of the sale of sugar would be diverted for settling farmers’ dues automatically.