Sugarcane farm payouts to top Rs 36,000 cr in 2023-24 crushing season

Payments for sugarcane farmers in Uttar Pradesh are likely to top Rs 36,000 crore as the state gears up for the 2023-24 crushing season.

Although the annual sugar season (October-September) started on October 1, crushing operations are expected to gain momentum in the coming weeks, starting from Western UP and gradually covering the entire state.

“Sugarcane payments in UP during the current crushing season are expected to top Rs 36,000 crore,” a sugar industry official said.

The state sugar production stood at nearly 10.7 million tonnes (mt) last year.

Of the total 120 sugar mills in UP, the private sector leads with 93 plants, followed by the cooperative sector with 24, and UP state sugar corporation with three.

Nearly 4.5 million households are directly associated with sugarcane farming in the state.

For the current crushing season, sugarcane area is estimated at 2.85 million hectares. Production estimate stands at 235 mt.

The Yogi Adityanath government is expected to raise cane state advised price (SAP), keeping the 2024 Lok Sabha elections in mind. SAP is the price paid by mills to farmers against cane procurement. It is more than the fair and remunerative price fixed by the Centre.

At present, SAP for common varieties of cane stands at Rs 340 per quintal (100 kg), while the price for early and late maturing varieties is fixed at Rs 350 and Rs 335 per quintal, respectively.

The Yogi government had last revised SAP in September 2021 before the 2022 Assembly elections.

However, the industry has urged the state against any upward revision of SAP citing hike in cost of production and loss on account of the molasses quota policy. Molasses is used in the production of ethanol.

Avantika Saraogi, the promoter of Balrampur Chini Mills Limited, which operates 10 sugar mills in UP, says ethanol will comprise 30 per cent of the firm’s revenue. 

“The company has invested Rs 1,200 crore to increase distillery capacity,” she told Business Standard, adding that the policies of the Union and UP governments were paying rich dividends to all stakeholders including industry, farmers, etc.

Ethanol is used in blending with fossil fuels. The current level of ethanol blending at 12 per cent is targeted to touch 20 per cent by 2025. This will provide a sustainable revenue stream to mills and facilitate quick farm payments. 

Deepak Guptara, secretary, UP sugar mills association, said the state mills were proactively investing in upgrading their plants and also expanding ethanol capacity.