Uttar Pradesh cane price hike to make sugar costlier by 1-2 rupees/kg
Informist, Friday, Jan 19, 2024
By Afra Abubacker
MUMBAI – The production cost of sugar in Uttar Pradesh is set to rise on average by 1-2 rupees to 38-39 rupees per kg after the recent hike in state-advised price of sugarcane, industry sources said.
On Thursday, the Uttar Pradesh government increased the state-advised prices of sugarcane by 20 rupees for all varieties for 2023-24 (Oct-Sep). With the hike, mills in the state will have to pay 370 rupees per 100 kg for good quality sugarcane, 360 rupees for average quality, and 355 rupees for poor quality cane.
Key sugarcane-growing states announce state-advised prices, while the Centre sets the fair and remunerative price. Both prices are paid by sugar mills to farmers on sugarcane purchases.
Apart from Uttar Pradesh, states such as Haryana, Punjab, and Uttarakhand also intervene in sugarcane pricing by announcing state-advised prices, which are usually higher than the fair and remunerative price, according to the Commission for Agricultural Costs and Prices in its 'Price Policy for Sugarcane (2023-24)' report.
The sugar mills located in these states are mandated to pay farmers according to state-advised prices. The previous increase in state-advised prices by the Uttar Pradesh government was in September 2021, months ahead of the assembly election in 2022. The next assembly polls in the state are due in 2027, but the General Election is due in Apr-May. Uttar Pradesh sends the largest contingent of 80 parliamentarians to the 543-member Lok Sabha.
The agricultural costs commission has been critical of state-advised prices as they result in mounting cane payment arrears by mills. As of Jan 18, mills in Uttar Pradesh had paid only 58.95 mln rupees to sugarcane growers, or 56% of the total amount payable to them so far in the 2023-24 sugar season, state government data showed. For the previous sugar season, mills in the state are yet to clear 17% of the total amount due of 380.5 bln rupees.
Asked about mills' capacity to make sugarcane payments on time, Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, said, "Prices (of sugar and ethanol) are good and realisation has improved, but the jerk in government policy on ethanol production will eat into profits.”
As sugar prices firmed up owing to the limited availability of sugarcane, the Centre on Dec 15 restricted the diversion of sugarcane juice and B-heavy molasses for ethanol production.
Uttar Pradesh, Maharashtra, and Karnataka are India's major sugar producers. India's sugar production in 2023-24 (Oct-Sep) is seen lower by 7.7% at 30.5 mln tn owing to a drop in sugarcane production, according to the federation. End
