UP govt mulls 10% increase in sugarcane price

State Advised Price which sugar mills have to pay had not been revised in three years, due to the bad economic health of mills, following a sharp decline in sugar prices

The government of Uttar Pradesh is mulling whether to raise the minimum price for sugar cane in the state by 10 per cent for the 2016-17 crushing season (it officially began on October 1).
 
This State Advised Price (SAP), which sugar mills have to pay had not been revised in three years, due to the bad economic health of mills, following a sharp decline in sugar prices. However, state elections are nearing and the Samajwadi Party government needs cane farmers’ votes.
 
”Cane farmers have urged the government to consider a hike in SAP this year, which it is considering. The government might announce a ~ 30 a quintal increase,” said two senior industry officials in the know. Three years earlier, the SAP was fixed at ~ 280 a qtl.

 

Three mills have started cane procurement and its crushing. Others are expected to follow by November 10. The new cane price would apply restrospectively.
 
Owing to lower cane availability across the country, including in Maharashtra, the second largest producer, mills are expecting this crushing season to be the shortest in five years and close by March-end.
 
Indian Sugar Mills Association (Isma) forecasts sugar production at 23.37 million tonnes for 2016-17, from 25.1 mt the previous season.
 
On the basis of September satellite images, Isma had estimated total cane sowing at close to five million hectares, about five per cent less than 2015-16.

 
Following two years of drought, Maharashtra will lose a quarter of its suagr production, to 6.27 mt from 8.41 mt the previous year. UP will claim thefirst position with a 12 per cent increase to 7.67 mt, from 6.84 mt the previous year.
 
With carryover stock of 7.5 mt from 2015-16 and expected production of 23.4 mt in 2016-17, there will be enough sugar available in to meet the estimated domestic demand of about 25.6 mt (estimating a demand growth of 2.5 per cent). That means a carryover stock of 5.2 mt for the 2017-18 season.