Forced to take note of the plight of the sugar industry, which has frozen capacities amid mounting losses, the Uttar Pradesh government on Wednesday decided to keep the state advised price (SAP) for sugarcane unchanged at R280/quintal for the marketing year that started in October.
This is for the second year in a row that the SAP has been kept at the same level.
SAP is the price the state fixes for mills’ cane purchases from farmers. UP has conventionally pegged SAP at levels much higher than the benchmark price (fair and remunerative price or FRP) set by the Centre, adding to the cost of the loss-ridden sugar industry. Even at R280/quintal, the SAP is 27% higher than the FRP for 2014-15.
Briefing the media after a cabinet meeting, UP’s sugar secretary Rahul Bhatnagar said that while the price for general variety will be R280, that for early variety will be R290 and that for rejected variety will be R275.
“The government has decided that farmers would be paid the cane price in two instalments. The first instalment would be paid by the mills within 14 days at the rate of R40 less than the SAP,” he said, adding that if the payment of the first instalment is not made in 14 days of the cane being crushed, it will attract interest.
The second instalment, 100% cane price payment, has to be made by the industry within three months after crushing comes to an end, he said.
“Since the industry is going through one of its toughest crisis, the state government has decided to help the industry by giving reimbursement and subsidy of R20/quintal to help it pay the second instalment of R40,” he said.
The break-up of the reimbursements would be society commission of R6.60 per quintal, purchase tax of R2 per quintal and entry tax on sugar of R2.80 per quintal. While this would add up to R11.40 per quintal, the government has decided to give an additional support of R8.60 per quintal to the industry once the entire cane price is paid, taking the total government support to R20/quintal.
In addition to this, the government has linked its additional support of R8.60/quintal to market forces and has decided that if the price of sugar and its by-products go below or above the benchmark price set by it, it would either reduce the support or increase it in proportion.
A committee headed by the chief secretary will study the trend of the four commodities from October 1 to May 31, 2015, and keep an eye whether the prices of the above factors are increasing or decreasing. In case the price of the factors shoot up, the government would reduce the additional support of R8.60/quintal as announced and would increase it if the mills make a loss.
Though the sugar industry seemed relieved, it said the full impact of Wednesday’s decisions have to be assessed.
Terming the government’s decision as a “sell-out to sugar millers”, VM Singh, convenor of Rashtriya Kisan Mazdoor Sangathan, said that the state government is trying to cover up its incompetence by giving in to the unjust demands of the sugar industry. The option of farmers going to the court for a another look into the unjust cane price was always open, he said.
At R280/quintal for the marketing year that started in October
Even at R280/quintal, the SAP is 27% higher than the FRP for 2014-15