UP dithers on price, but gur units start crushing

Gur and khandsari units in Uttar Pradesh have begun crushing sugarcane at Rs 120-125 a quintal even as the state government is yet to announce the state advised price (SAP). The new price is a quantum jump from the Rs 60-70 that gur producers paid to farmers in the last season.

“Gur prices have considerably improved and gur producers are in a position to pay Rs 125 a quintal now. Their capacity to pay would be even higher (in the range of Rs 135-140 a quintal) in the following weeks when the recovery rate improves. Farmers would prefer t]o sell whatever quantities they can to the gur units to get paid in cash even if the price is slightly lower to the mills. The delayed payment by mills in the last two seasons has left the farmers disappointed,” said Arun Khandelwal, president, Federation of Gur Traders, Muzaffarnagar.

Gur prices in UP’s Muzzafarnagar district, Asia’s largest gur mandi are ruling at Rs 1,850-1,950 a quintal, more than double of last year’s price of Rs 900 a quintal.

Khandelwal added that the fall in sugarcane acreage in the state is certain to cause a price war between sugar mills and the gur producers. Sugarcane acreage in the state is down by nearly 20 per cent as farmers shifted to remunerative crops such as paddy to take advantage of better prices.

“Gur prices are high and there might be a substantial diversion to the gur units. Therefore, we would look to begin crushing operations by mid-October,” said Gaurav Goel, managing director, Dhampur Sugar Mills, which runs four sugar mills in the state.

UP is the second largest sugar producing state in the country. Mills will like to crush as much as possible since sugar prices have appreciated by 35 per cent since October 2007 to Rs 1,800 a quintal (ex-factory in UP) and prices are expected to remain firm on a production dip.

This would be unlike the 2007-08 season when all mills in the state delayed crushing by over a month protesting against the SAP of Rs 125 a quintal for sugarcane.

They began crushing in late November only after the state High Court announced an interim price of Rs 110 a quintal (Rs 15 lower to the state advised price).