UP sugar mills declare bonus for cane growers

Will help state government breathe easy.

In an unprecedented move, sugar mills in Uttar Pradesh have unanimously decided to pay Rs 15 a quintal to farmers as sugarcane development incentive above the state-advised price (SAP) of Rs 165-170 a quintal and the union government’s fair and remunerative price (FRP) of Rs 129.84 a quintal.

This will make the Mayawati government of Uttar Pradesh breathe easy as the Centre has ruled that anything above the FRP will have to come out of the state’s coffers. Uttar Pradesh is the country’s second biggest sugar producing state, after Maharashtra.

“All the mills in western Uttar Pradesh and some in central Uttar Pradesh will begin crushing on November 18. We cannot pay a price higher than this (Rs 180-185 a quintal) since the recovery (of sugar from sugarcane) is lower. Moreover, we are required to sell 20 per cent of the produce to the public distribution system now vis-à-vis 10 per cent in the last season,” said C B Patodia, president of the UP Sugar Mills Association and advisor to the Birla Group of sugar companies.

The association took this decision at a meeting held today. Bajaj Hindusthan, the country’s biggest producer, also attended the meeting, though it is not a member of the association. While instances of mills paying a price higher to SAP have been witnessed in years of sugarcane shortage, this is the first year when it will be done officially.

While sugar prices have risen over 100 per cent to Rs 40 a kg in the last one year, the acreage of the sugarcane crop is down 10 to 15 per cent. This has led to farmers demanding a high price for their crop.

The Uttar Pradesh government was doing a tightrope walk because high SAP would have fuelled further rise in sugar prices, and, at the same time, it cannot afford to upset the powerful lobby of sugar farmers. Today’s decision will ease the pressure on it.

The state had declared SAP of Rs 165-170 a quintal for the new sugar season. However, this was followed by a declaration of FRP of Rs 129.84 a quintal by the union government.

The state government was unhappy with this price. In a letter to Prime Minister Manmohan Singh, Chief Minister Mayawati asked the centre to review the decision which requires state governments to pay the difference between FRP and SAP.

“FRP is just a guideline and mills cannot pay a price lower than this. However, we expect mills to pay more than FRP since sugar realisation is Rs 3,000 a quintal. At least 70 per cent of the price realisation should go to the farmers,” Agriculture Minister Sharad Pawar had said earlier this month.

However, farmers’ associations in the state, led by Mahendra Singh Tikait and V M Singh, have been agitating. They have been seeking a price of Rs 280 a quintal and have expressed their resolve of not supplying at a price below this.