No change in sugarcane prices this season in Uttar PradeshFebruary 17, 2021
The Uttar Pradesh cabinet has decided not to change the state advised price (SAP) of sugarcane for the current crushing year. The decision was taken late on Sunday night in a cabinet meeting.
So, for the current 2020-21 marketing year, the SAP would remain at Rs 315 per quintal for the common variety, which accounts for more than half of the total sugarcane produce, while the prices for early variety and rejected varieties of cane would remain at Rs 325 and Rs 310 per quintal, respectively.
This is the third straight year when the state government has decided not to hike the price of cane. The SAP was last increased by Rs 10 per quintal in 2017, soon after the Yogi Adityanath government came to power.
“Sugar mills in Uttar Pradesh are already finding it tough to pay cane farmers their dues because of low sugar recovery this season, which has, in effect, pushed up the cost of production. So far in the current season, sugar recovery in the state is around 0.7% lower year-on-year. The drop in recovery rate has increased the cost of sugar production by approximately Rs 200 per quintal. Added to this is the fact that ex-mill prices of sugar in the local markets have also declined due to a huge carryover stock.
The current prices of sugar are hovering around Rs 31-32 a kg. In such a scenario, if the SAP is also increased, it would be the last nail in the coffin for the sugar mills, which are already struggling to make the payments as per last year’s SAP,” said a miller, requesting anonymity.
According to industry insiders, there was a lot of pressure on the state government to increase the SAP for the 2020-21 season, mainly, because there had been no increase for two years and also because the Centre had increased the fair and remunerative price (FRP) for cane for this season and farmers in the state were looking forward to a similar hike at the state level.
“The SAP in UP is a rather complex topic, one which is fraught with political connotations. The government of the day, usually weighs the pros and cons of hiking the SAP, especially when sugar prices are on a downward spiral and the recovery, too, is low. While there was a huge demand from the farmers to increase the SAP in view of the increased diesel and electricity prices, on the other hand was a scenario that if the prices are hiked, the mills, which are already facing payment issues, would default on payments, leading to huge arrears at the end of the season,” said an official of the sugarcane department, adding that with an election looming ahead, this would have been a very tricky situation for the government.
“For the government, the SAP is a double-edged sword, especially because the state would be going into elections next year. If the SAP is increased and the mills are not able to clear a substantial part of it on time, the arrears would come back to haunt the government right in the middle of the elections,” said a sugar sector insider, adding that by not announcing a hike this year, the government has also kept the window open for a substantial hike in an election year.
Elections in the state are scheduled to be held by March 2021, when the crushing would be in progress. “That also explains why the state government is going after the sugar mills to clear their dues at the earliest this year. If mills are allowed to pile up payments, the dues would appear monstrous by the end of this season,” said another miller.