Farmers seek 20% raise in cane prices

Import of raw sugar for refining and selling unviable at current prices

In a setback for sugar mills, farmers in major growing states are demanding a rise of about 20 per cent in cane prices, owing to the rising costs of diesel, manure and labour, and the fact that mills recorded profits in the last quarter of the sugar year (October-September).

Ahead of Uttar Pradesh Chief Minister Akhilesh Yadav's announcement of a state advised price (SAP) for sugar, the Kisan Jagriti Manch (KJM), an organisation of farmers in Uttar Pradesh, has urged him to fix the cane price at Rs 300 a quintal. In the last season, the government, under then chief minister Mayawati, had raised the SAP a staggering 42 per cent to Rs 240-250 a quintal, depending on the recovery from cane. After a meeting of the cane commissioner with representatives of all stakeholders, KJM president Sudhir Panwar had written to the chief minister in this regard.

For this season, farmers in Maharashtra are demanding at least Rs 300 a quintal for cane. In the last season, linked with the fair and remunerative price (FRP), payment stood at Rs 88-250 a quintal in Maharashtra, depending on the quality and the delivery to mills.

SEEKING A SWEETER DEAL

• Rs 300 a quintal Cane price sought by farmers in Uttar Pradesh
   
• Rs 240-250 a quintal SAP announced by the Mayawati government for the last season
   
• 20% Import duty on refined sugar sought by mills
   
• 10% Current import duty on raw sugar

“Farmers have been demanding a substantial increase in cane prices every year. This year, they have been asking for Rs 300 a quintal or even higher. But the Uttar Pradesh government should consider mills’ capacity to pay before fixing SAP for the season,” said Abinash Verma, secretary general, Indian Sug-ar Mills’ Association (Isma).

According to a senior official of the Maharashtra State Co-operative Sugar Factories Federation, discussions between the state government and farmers’ associations are likely to begin soon. Ajit Chougule, managing director of the federation, said farmers wanted more for their cane. Amid the uncertainty on the price front, eight mills in Maharashtra have started crushing for this season. Mills in Uttar Pradesh, however, are awaiting the state government's announ-cement on SAP.

Isma estimates sugar output this year at 24 million tonnes, against 26.2 million tonnes in the previous year.

Meanwhile, sugar mills have urged the government to raise the import duty on refined sugar from 10 per cent to 20 per cent. They have also demanded the duty on raw sugar imports be retained at 10 per cent. “At the current price of $545 a tonne, the import of raw sugar for refining and selling in India is unviable. Though a small consignment of about 50,000 tonnes has arrived in Indian ports, further import of raw sugar looks impossible, considering the sufficient quantity available from domestic sources,” said a senior industry official.

After recording three quarters of losses due to spot prices being lower than the cost of production, mills started seeing profits in early September. Ex-factory sugar prices shot up to Rs 3,600 a quintal, about Rs 400 higher than the average production cost of Rs 3,200 a quintal. However, in Uttar Pradesh, prices fell to the current ex-factory price of Rs 3,400 a quintal. Despite this, mills recorded a profit of about Rs 200 a quintal. Unless the market is decontrolled, as recommended by the Ranga-rajan committee, any additional rise in cane prices would exert pressure on mills. If cane prices are raised, sugar price should also be raised proportionately, without government intervention, the official added.