UP may raise state-advised cane price by 35%

Announcement likely by October 15.

Uttar Pradesh is likely to fix the state-advised price for sugarcane for the new crushing season that started today at Rs 180-190 a quintal, up from Rs 140 for the last season, a state official said today.

He said the state government is in talks with mills for fixing the cane reservation area, and would decide on the sugarcane price by mid-October.

“We are holding meetings with mills, the cane price should be finalised by around October 15,” the official said.

The committee on cane price, headed by cane Commissioner Sudhir M Bobde, would submit its recommendations to UP Chief Secretary Atul Kumar Gupta on October 5. For the current season, while MSP has been fixed as Rs 107 a quintal, decision on SAP is still awaited.

Interestingly, farmers are demanding higher SAP to the level of almost Rs 300 a quintal in the backdrop of high sugar prices and low cane production this year, while the sugar industry is willing to pay in the region of Rs 175. An official with the Uttar Pradesh Sugar Mills Association said the industry too favours a high state advised price this year to prevent its diversion to gur and khandsari units, but it feels the demand of the farmers’ bodies is too high.

“The association believes cane prices should ideally be fixed at about Rs 160-170 a quintal. This level would be beneficial to both mills as well as farmers,” the official said.

In the sugar season ended September 30, cane growers in Uttar Pradesh had sold about 40 per cent of the total cane crop to gur and khandsari units, which were paying better prices.

In the last season, the state-advised price for cane was Rs 140 a quintal. Gur and khandsari units, however, paid farmers about Rs 180-200 a quintal for cane in view of better gur prices and high demand for molasses from country liquor making units.

Sugar mills in the state were forced to pay higher prices for cane, and most of them bought sugarcane at Rs 155-160 a quintal. In the new season, competition for cane is seen even fiercer, as cane supplies are tight due to poor rains in the state and gur units have already started buying cane at around Rs 200-220 a quintal.

Sales quota for October
The government has set a sales quota for mills at 2.08 million tonnes for this month, the food ministry said in a statement today. The government said in June it would announce monthly sales quota for mills until the ban on futures trading in the commodity stays, the ministry said. The government said it may release additional quantities if needed to cool prices.