Uttar Pradesh likely to hike cane price amid sugar crisis

The UP government is likely to hike the sugarcane price by about ~10 a quintal for the current crushing season even as banks have put sugar on the negative list owing to uncertainties around sugarcane-sugar pricing and demand-supply mismatch.

Last year, the state had increased the state-advised price (SAP) by ~10 a quintal from ~305 a quintal to ~315 a quintal for the common variety of sugarcane. However, it resulted in an accumulation of a massive outstanding at the end of the 2017-18 crushing season owing to a glut of sugar in the market and price dip. UP millers, most of them private, owe about ~68 billion in arrears for the previous season, although the current season started with almost 75 per cent of the 119 mills operational. The remaining will start by the end of the month.

There is increasing pressure on the government to declare the SAP for 2018-19 and a decision is likely to be taken this week since the high-level cane pricing committee, headed by the chief secretary, has held the stakeholders’ meeting.

The farmers have demanded the cane price to be hiked to almost ~400 a quintal, citing increase in costs of farm inputs, including diesel, labour and fertiliser, while private millers have expressed their inability to pay even at the existing level and

warned of a further build-up of arrears. However, with the Lok Sabha polls due in early 2019 and the ruling BJP facing a joint opposition and anti-incumbency, the state government would like to keep cane farmers in good humour.

On October 2, UP farmers had staged a protest at the Delhi border to highlight farm distress and bring pressure on the Central government to take

steps to make agriculture lucrative and risk-free.

Earlier, UP Chief Minister Yogi Adityanath had set the deadline of November 30 for mills to settle their arrears although he had on multiple occasions conceded that the sugar sector was facing a crisis owing to glut and crash in global sugar prices. His government had announced a package of ~40 billion in the form of soft

loans to private mills with the last date of applying being October 31. Eligible private mills are likely to avail of soft loans of ~33 billion, which would be directly credited to the farmers’ accounts. However, several sugar companies, including Bajaj Hindusthan, which operates 14 mills in UP, which were not eligible for soft loans, would find it tough to meet the November end deadline.