UP sugar mills' delay may mean distress cane sales

The prolonged delay in the start of sugarcane crushing by mills in Uttar Pradesh may spur distress sale by farmers.

Since, the farmers need their fields vacant for the coming rabi season mainly for sowing wheat, the cane may be diverted towards the kolhu, khandsari and crusher units, since they pay almost matching prices in cash.

The sugar mills are yet to start, since the industry maintained it was not capable of paying at the levels of Rs 205-210/quintal for cane as declared in the State Advised Price (SAP).

The farmers not only want their fields vacant for sowing wheat, they need money for expenses, while sugarcane harvest also provides cattle fodder. There are an estimated 4 million cane farmers in UP.

“We want the state government to facilitate an early start of crushing by mills to stop any distress sale to crushers and kolhu units,” Shrikant Singh of the UP Cooperative Sugarcane Societies' Federation told Business Standard.

He said since the cane availability was not sufficient to support a full crushing season, the mills would rather prefer delayed crushing for better recovery rate.

Earlier, the farmers had demanded cane price of about Rs 300/quintal, however, Singh said in the present circumstances, it looked a remote possibility, as the wholesale sugar prices had been ruling below Rs 2,800/quintal.

“The government should provide incentives to mills such as allowing sugar exports, so that they can pay better prices,” he said adding the mills were likely to start after November 20. Meanwhile, the kolhu and khandsari units in western UP have been paying up to Rs 190/quintal.

On November 2, UP had announced a record rise of Rs 40/quintal in SAP for the 2010-11 crushing season to Rs 205/quintal for common variety. Meanwhile, Indian Sugar Mills Association (ISMA) is likely to hold a meeting in New Delhi this week to discuss cane price issue and future course of action.