UP raises cane SAP by Rs 40/ qtl

Officials express shock over increase; crushing to start from November 15.

At a time when the domestic sugar industry is reeling under losses, the Uttar Pradesh state government has announced a record hike of Rs 40 a quintal in the State Advised Price (SAP) of sugarcane for the 2010-11 crushing season (October-September). SAP for the common variety now stands at Rs 205 a quintal while SAP for early variety will be Rs 210 a quintal.

Now, the SAP for common variety has touched Rs 205 a quintal level, which is about midway between what the industry was willing to pay and the farmers’ demand. Likewise, SAP for other varieties also stands hiked by Rs 40 a quintal.

Sugar industry officials have expressed a shock over this increase at a time when the country is expecting a bumper crop and sugar price is likely to come under pressure.

“At this price of sugarcane, the cost of producing a quintal sugar will be around Rs 2,800 after factoring in purchase tax, processing cost, interest charges and depreciation. The current sugar realisation is Rs 27.50. We cannot operate at this prices,” said an industry official. After factoring in levy obligation, sugar should sell at more than Rs 3,100 a quintal if the industry is to survive.

SAP is the minimum price to be paid to cane farmers by the mills. Last year, SAP was hiked by Rs 25 a quintal and had stood at Rs 165 a quintal for common variety, Rs 170 for early variety and Rs 162.50 for rejected variety.

For 2010-11, the cane fair and remunerative price (FRP) announced by the centre is Rs 129.26 a quintal on 10 per cent recovery. “The effective FRP for UP cane farmers stands at Rs 133.26 a quintal,” UP chief minister Mayawati told media persons after announcing the SAP here.

She said the hike in SAP was arrived at after considering the farmers’ demand, farm cost, alternative crop prices and current sugar prices.

“In our meeting with the state government, we had submitted that the industry could only pay at last year’s SAP levels of around Rs 165 a quintal,” an industry insider said on anonymity.

Sugar industry body Indian Sugar Mills Association (Isma) is likely to hold a meeting next week to deliberate the issue.

UP principal secretary, sugar industry, Netram told Business Standard that the crushing would start after Diwali, while the industry maintained that crushing could start only after November 15.

Bharatiya Kisan Union (BKU) leader Rakesh Tikait said SAP was ‘reasonable’, however, he demanded that the state government should allow farmers to sell cane to mills, which paid maximum price.