NITI wants UP to change sugarcane pricing to avoid build-up of arrears

Officials said the Aayog has also strongly favoured 'depoliticising' of cane pricing in UP

The NITI Aayog has advised the Uttar Pradesh government to implement a sugarcane pricing formula which does not lead to the build-up of farmer payment arrears, this being good for neither cultivators nor millers.
 
Officials said the Aayog has also strongly favoured ‘depoliticising’ of cane pricing in the state. But, it is unclear whether the Aayog has favoured implementing the Rangarajan formula, for fixing the cane price at 75 per cent of that at which sugar is sold.
 
The food ministry had reportedly urged the government to implement the Rangarajan formula of sugarcane pricing as the difference between the state advised price (SAP) and the Centre’s fair and remunerative price (FRP) has narrowed in the past few years.
 
Officials said the Aayog’s recommendations are part of a slew of measures it suggested to the newly elected UP government, to revive the agriculture sector. The state has reportedly formed a panel to implement the recommendations in a time-bound manner.
 
The recommendations have not gone down well with some experts.
 

Recommendations

• ‘Depoliticise’ sugarcane pricing so that it does not lead to build-up of arrears
• Arrest the decline in area under canal irrigation in UP
• Enter into long-term arrangements for supply of high-quality seeds
• Ensure that the MSP fixed by the Centre reaches maximum number of farmers
• Power supply for the sector be given top priority 

“In Uttar Pradesh, the SAP is calculated on the basis of input cost, while most other formulas being floated around try to link it to the final price of sugar and also byproducts of cane, which compromises the interest of farmers,” Sudhir Panwar, former member of the state's Planning Commission told Business Standard.
 
He said the Rangarajan formula might be good for other states but the sector in UP was structured differently.
 
“What the previous government did was to pay the difference between the SAP and market-determined cane price if it dropped below a threshold limit. A mechanism on similar lines should be considered to safeguard the farmers,” Panwar felt.
 
The Aayog, officials said, also suggested the UP government arrest the decline in area under canal irrigation. From 1991-93 to 2012-14, this area in the state had dropped from 3.2 million hectares to 2.55 mn, a fall of 26 per cent. “The state should also enter into long-term contracts with seed suppliers to ensure availability is not hampered,” the official said.
 
The Aayog has also favoured ensuring that as many farmers in UP as possible get the benefit of the central government's Minimum Support Price, something state officials have said they’d implement at the earliest.
 
 The Aayog has also advocated reforming of power supply to the farm sector in the state. And, reforming the working of wholesale markets. “We have advised that the state implement all the suggestions in a time-bound manner,” said the official.