UP farmers want 25% more for cane even as mills struggle with current price

Millers cite crisis in market due owing to glut and low sugar realisation to buttress claims of cash flow challenges, which had already resulted in high sugarcane arrears for the last season

As crushing operations in the country’s top sugar producer Uttar Pradesh is slowly picking up pace, the state farmers have demanded a hike of over 25 per cent in cane price, to about Rs 400 per quintal for 2018-19 season.

This comes in the backdrop of the private millers reiterating their ‘inability’ to pay even as the existing cane price level of Rs 315 per quintal (common variety) fixed last year for 2017-18 cycle.

At the cane price fixation meeting chaired by chief secretary Anup Chandra Pandey in Lucknow on Monday, the farmers’ representatives firmly demanded there was urgent need to revise the State Advised Price (SAP) of cane to Rs 400 per quintal in the backdrop of higher diesel, fertiliser and other farm input costs.

“The central and state governments have been highlighting their agenda of doubling the farmers’ income and yet there has been insignificant increase in the cane price in recent years,” UP cane societies representative Arvind Kumar Singh, who participated in the high level meeting told Business Standard.

While, the Centre has fixed the fair and remunerative price (FRP) of cane at Rs 275 per quintal, UP traditionally announces much higher effective cane price to be paid by the mills to further remunerative its farmers.

The millers have cited domestic sugar crisis owing to market glut and low sugar realisation to buttress their claims of cash flow challenges, which had already resulted in high sugarcane arrears for the last season.

Currently, the state cane outstanding stands at about Rs 78 billion pertaining to 2017-18, although 75 private millers are said to have applied for collectively availing a Rs 40 billion soft loan sponsored by the Adityanath government to ease the payment situation.

The mills maintained that the fact that the state had to announce the soft loan package was proof enough that the sugar sector was facing payments difficulties and any further hike in price would only compound the problem.

There are about four million rural households in UP directly associated with sugarcane farming with the sugar and byproducts sector generating direct economy of almost Rs 500 billion annually.

In run up to the crucial 2019 Lok Sabha poll, the ruling Bharatiya Janata Party (BJP) can ill afford to antagonise the state farmers, especially in western UP, which has higher concentration of sugar mills.

So far, about a dozen sugar mills have started their crushing operations in UP, of the total 119 units spanning private and cooperative sectors. The state government is confident that majority of the mills would start crushing by mid November.

Besides, private mills have urged the state for allowing staggered payments to farmers with the first installment being FRP of Rs 275/quintal to prevent the prospective build up of arrears in the current season. They have also underlined that the domestic sugar sector has already been put in the negative list by commercial banks.

According to UP cane commissioner Sanjay Bhoosreddy, of the 94 private mills, 19 units did not qualify under the soft loan scheme. These included 14 and 3 mills of Bajaj Hindusthan and Simbhaoli Groups respectively, apart from 2 standalone sugar factories.

This year, UP cane acreage is estimated at 2.6 million hectares (MH), up 18% from 2.2 MH during 2017-18, when UP had clocked sugar production of 12 million tonnes (MT) with farmers’ payables touching Rs 354 billion.