Centre's sugarcane draft rules create ripples in western Uttar Pradesh

A section of farmers feel the proposed provisions could hurt cane growers and small khandsari units. Sanjeeb Mukherjee reports

The Centre’s proposed amendments to the Sugarcane (Control) Order, 1966, have roiled sections of farmers in Uttar Pradesh, one of the country’s largest sugar-producing states and a politically crucial sugarcane belt, ahead of the 2027 Assembly elections. The amendments were floated last month and are open for public comments until May 20.

 

One provision causing consternation among farmer groups is the proposal related to gur and khandsari units. Farmer groups alleged that the provision not only made it mandatory for the gur and khandsari units to pay the Fair and Remunerative Price (FRP) to farmers but also discouraged them to pay a price that is higher than the rate paid by neighbouring sugar mills.

 

Khandsari is a traditional, unrefined raw sugar derived from sugarcane. According to estimates, gur and khandsari units consume almost 15-25 per cent of the total sugarcane produced in India annually. The share varies from year to year.

 

These units are largely small, micro enterprises often run by cane farmers themselves or by local entrepreneurs. According to estimates, UP’s 10-12 major sugarcane-growing districts account for the bulk of these gur and khandsari units, many of which operate through locally known kolhu-crushers.There are 2,000-3,000 such manufacturing units in each major sugarcane-growing district of the state. Most of these localised gur and khandsari units are concentrated in Meerut, Muzaffarnagar, Baghpat, Saharanpur, Bijnore, Amroha, and Bareilly.

 

Farmer groups say the draft provisions seek not only to regulate the unorganised gur and khandsari sector but also introduce measures, which could be detrimental to both sugarcane farmers and the khandsari industry.

 

In a letter to the Centre, the Bhartiya Kisan Union (Apolitical) argued that all crushers and traditional kolhus should be brought under a single category, as modern kolhus now use advanced rollers comparable to, or larger than, those used in khandsari units. It suggested that classification should be based on crushing capacity rather than roller size, as animal-driven units have virtually disappeared.

 

The BKU faction objected to categorising “shakkar” (powdered jaggery) alongside raab (traditional sugarcane syrup made from jaggery) and khandsari sugar. According to the union, shakkar is essentially powdered jaggery and should therefore be treated as a jaggery product rather than a sugar derivative.

 

Farmer groups also criticised the mechanism of fixing the FRP, which is largely based on sugar recovery. It argued that sugar mills now generate substantial additional income through ethanol production, compressed biogas (CBG), molasses, bagasse-based electricity generation and press mud. The letter demanded that revenue from all these by-products be factored into cane price calculations. The union also called for production cost assessments to include land rent, interest on capital, risk and management expenses.

 

Additionally, it opposed the provision linking sugarcane pricing to ensuring affordable sugar for consumers, saying it unfairly restricts farmers from receiving remunerative prices for their produce.

 

On the regulation of gur and khandsari units, the farmer group said Section 4 of the draft mandates that such units must also pay FRP to farmers. Their argument is that although the khandsari industry generally pays more than the FRP, payments are usually linked to the recovery of khandsari sugar or jaggery, which remains low during October-November. Farmers begin harvesting cane during this period to prepare for wheat sowing and require immediate cash. 

Sugar mills begin operations only when sugar recovery crosses 9 per cent, by which time wheat sowing is nearly complete. “While bringing khandsari units, crushers and kolhus under the FRP framework, the government should simultaneously move towards fixing a minimum selling price (MSP) for jaggery, shakkar and khandsari products on the lines of sugar,” said Dharmendra Malik, spokesperson of BKU.

 

Other farmer groups are also formalising their opposition to the draft. Malik, along with fellow farmer leaders, recently met Union Minister for Skill Development and Rashtriya Lok Dal (RLD) chief Jayant Chaudhary, highlighted the unease among farmers and small crushers alike. Chaudhary, who is the grandson of former Prime Minister and farmer leader Chaudhary Charan Singh, draws much of his political support from western Uttar Pradesh’s sugarcane belt. 

Since the 2020 farmers’ agitation, the ruling BJP has worked to consolidate its position in the largely agrarian belt with the support of ally RLD, even as sporadic farmer discontent continues to surface. 

 

The Yogi Adityanath government earlier this year announced one of the sharpest hikes in the State Advised Price (SAP) for sugarcane for the 2025-26 season. The state government has raised the SAP by ₹30 per quintal, taking the procurement price for early-maturing varieties to ₹400 per quintal. 

For common varieties, the SAP was fixed at ₹390 per quintal for the 2025-26 season, up from ₹360 in the previous season. The state government had then claimed that the over 8 per cent increase in SAP would translate into an additional income of ₹3,000 crore for sugarcane farmers during the 2025-26 crushing season. The last time the SAP was increased more sharply than in the current season was in 2021-22, ahead of the Assembly elections, when it was raised from ₹315 to ₹340 per quintal for common varieties, while early-maturing varieties were fixed at ₹350 per quintal.

 

More recently, former Uttar Pradesh BJP president and prominent western UP leader Bhupendra Chaudhary was inducted into the Yogi Adityanath government during the latest Cabinet expansion. According to reports, he could be assigned a key portfolio. 

Co-op sugar units seek phased cane payment model 

The National Federation of Cooperative Sugar Factories (NFCSF) in its submission before the Centre on control order is likely to propose the adoption of Gujarat Model of Cane Payment System across the country. 

Here, the first instalment is paid on the basis of previous year sugar recovery; the second on basis of current year sugar recovery at the close of the crushing season; and the last on basis of final sugar recovery for the season. 

According to sources, the cooperative sugar factories are also expectedto opt for retaining the provision on interest on delayed payments at 15 per cent for delays beyond 14 days. On the distance criteria between two mills, which the draft amendments proposed to be increased to 25 kilometres from 15 kilometres, the NFCSF feels that sugar mills with capacity below 5000 tonnes of cane per day may be permitted to expand in a liberal manner without strict enforcement of the stipulated parameters. But, permission for expansion beyond a certain limit may be discouraged.