Centre, states lock horns over cane price issue

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Lucknow: The rush to please sugarcane farmers became Centre-state row on Wednesday when Uttar Pradesh joined Punjab government to snub the central government’s “fair and remunerative price” (FRP) as too low.

The stand off has created a problem for the sugar millers including Bajaj Hindustan and Balrampur Chini as they are unsure who will finally foot the bill for the “high” cane prices demanded by the farmers.

The two key sugar producing states have given the farmers the support they need to prolong their agitation on pricing of the crop, threatening to wreck India’s sugar economy. This means the retail price of sugar that has already touched Rs 34 per kg, a 100% rise from that of the same period last year, is likely to shoot up further.

At stake is the right to price the sugarcane crop on which both the Centre and the states have claimed authority. India’s annual demand for sugar is about 23 million tonne while the annual production for 2009-10 is expected to be only 16 million tonne. The government has authorised the sugar mills to import raw sugar, but the farmers in Uttar Pradesh have enforced a blockade on the consignment from Brazil and also burnt part of the cargo.

The farmers plan to hold a mahapanchayat on Thursday to press for better price of the domestic crop. The Centre has set a price of Rs 129.84 per quintal as the FRP for 2009-10. On the eve of the meet, Punjab government sided with the farmers saying it was too low and has said it will not allow the private sector mills to buy the crop at less than Rs 190-200 per quintal. Uttar Pradesh has set a price of Rs 165-170 per quintal.

Uttar Pradesh Cabinet secretary Shashank Shekhar Singh said on Wednesday, “We are governed by the Supreme Court order of 2004 stating that the (state governments) can fix price for its farmers. So for us, FRP does not make any sense”.

In the face of this belligerence, the Centre has softened its stand on the issue. According to sources, it will allow the state governments to carry on with their price regime but will ask them to bear the cost of the difference between the price fixed by the Centre and the states for the 20% levy sugar.