UP govt decides not to raise cane price; SAP stays at Rs 315 a quintal

Belying expectations of a token hike in the sale price (set by the state) of sugarcane in an election year, the Uttar Pradesh government has decided to keep the rate unchanged for this 2018-19 season (which officially began October 1 and runs till end-September 2019).

The ‘State Advised Price’ (SAP) for the common variety of cane in UP, the country’s top sugar producer, stays Rs 315 a quintal (qtl). Farmer groups in UP had demanded Rs 400 a qtl, pointing to rises in input costs, such as of diesel, labourers’ wages, fertiliser and so on.

However, private sugar mills (94 in all) had reiterated their inability to pay growers at even the existing SAP. 

With the prevailing low prices and a depressed market outlook, a rise will only mean further accumulation of payment arrears, they warned.

Sugar companies have for several years been asking that the government-set price for cane be linked to the retail sugar price. The UP government has not taken a stand on this, although it had earlier said a committee would study the subject.

In the 2017-18 crushing season, UP’s sugar output was a little more than 12 million tonnes (mt). A global glut in sugar and falling prices in the home market led to payment dues of Rs 42 billion at the season’s end.

Even so, while farmers have been complaining rach season, UP’s cane sowing has been rising. The 2018-19 area is estimated at 2.6 million hectares, up 18 per cent from the 2.2 million as of 2017-18. This is partly because despite payment delay, cane farmers see the SAP mechanism as a better bet than alternative crops like paddy or wheat.

Sugarcane farmer leader Arvind Singh told Business Standard the payment for paddy and wheat is never at the Minimum Support Price.

The official deadline was Friday for private millers to settle all their payment arrears but this is still around Rs 40 billion.