UP sugar mills to challenge state cane price

Sugar mills in Uttar Pradesh plan to move court to challenge the price of cane set by the provincial government for the 2010-2011 season, an official from a producers’ group said in New Delhi.

Mills in Uttar Pradesh, India’s biggest sugar cane-growing state, will approach the Allahabad High Court in two days, said the official, on condition of anonymity

Crushing of sugar cane in the state that’s home to more than 100 mills might begin after November 20, as the court may decide on a price by then, the official from the Uttar Pradesh Sugar Mills Association said.

The Uttar Pradesh government last week increased prices mills must pay growers for cane to as much as Rs 210 a quintal, up from Rs 170 last year, a level deemed high by producers as domestic output is forecast to exceed demand for the first time in three years.

Producers in Uttar Pradesh pay a so-called state-advised price. The rate, aimed at shielding four million cane farmers, is usually higher than the floor rate set by the federal government.

“At current domestic sugar prices, it may not be feasible to pay the cane price fixed by Uttar Pradesh,” Abinash Verma, director general of the Indian Sugar Mills Association, said on November 2. “If prices stay at current levels, it is difficult for mills to pay the state-advised price for cane.”

Growers will withhold supplies if mills don’t pay at least Rs 280, Rakesh Tikait, national spokesman of the Bharatiya Kisan Union, a farmers’ group, said on November 2.

Factories paid an average Rs 285-290 last year to secure cane amid a shortfall in production.