The Indian Express (Delhi Edition)
Cash crunch dashes cane farmers’ hopes
WHAT SHOULD have been a sweet season for cane growers in poll-bound Uttar Pradesh (UP) is turning out to be a bitter one, with prices of both sugar and gur falling thanks to demonetisation. It has meant reduced bargaining power for farmers, even with India’s total sugar production slated to dip from 252 lakh tonnes (lt) in 2015-16 to 225 lt this season and UP being the sole state seen to record an increase from 68.55 lt to 75 lt-plus.
Since demonetisation happened on November 8, ex-factory sugar prices in UP haveeasedfromaroundrs3,600tors3,450 perquintal.thedrophasbeenevenmorefor gur, where prices at Hapur have plunged from Rs 2,800 to Rs 2,400 per quintal.
“Demand is subdued, as there is little cash available in the market. Traders are buying sugar only for day-to-day requirements and not for stocking up. This time, we expected them to purchase more at the season’s start (mills began crushing last month), given the overall tight supply position. Instead, they are waiting and watch. Without liquidity improving, we don’t see prices going up,” said a UP miller.
It’s worse with gur, where the business is entirely cash-based. The kolhus – which typically crush 10 tonnes per day of cane, as against the 5,000-tonnes or more capacity of sugar mills – were offering farmers rates of Rs 280-300 per quintal in the period immediately preceding demonetisation. But now, they are paying Rs 220240/quintal.
“Many of them have shut down because they don’t have the cash to run. Although the UP government has announced a state advised price (SAP) of Rs 305/quintal for this season, mills will be under no pressure to pay because there is no competition from kolhus to purchase our cane,” noted Jitender Singh Hooda, a farmer from Kheri Bairagi village of Shamli district.
UP mills – basically those belonging to the UK Modi group, Simbhaoli Sugars, Mawana Sugars, Rana Sugars and Bajaj Hindusthan – are still to pay Rs 1,028.75 crore out of the Rs 18,003.21 crore worth of cane that they bought from farmers in the 2015-16 season at the SAP of Rs 280 per quintal. While the Akhilesh Yadav government has increased the SAP for the current season, keeping in view Assembly elections early next year, falling sugar prices can make it difficult for mills to pay.
“This has come at a bad time. We were looking for a good season because low sugar output in drought-hit states like Maharashtra and Karnataka should have benefited us. But with sugar and gur prices coming down, our hopes are dashed. Even if prices increase later with cash and demand returning, it will not matter, as we would already have supplied our cane by then,” added Hooda.