Cheer for UP farmers, gloom for mills as cane floor price hiked

Gearing up for a defining state election just six months away, the Uttar Pradesh government on Tuesday raised the floor price of sugar cane by 19%, bringing cheer for the state?s four million sugarcane farmers but gloom for its 126 mills which must cough up more.

Chief minister Mayawati said the state advised price (SAP) for sugarcane for the ongoing crushing season has been raised from R 205 a quintal to R240 a quintal, making UP sugarcane the costliest for mills in India. The new floor price bests Punjab?s R225. It is also R95 more than the fair and remunerative price (FRP) of R145 set by the central government. The common cane variety is priced at R240 while the early variety (10% of the state?s production) will cost R250 ? R40 more than last year?s R210. UP is the country?s largest cane producer.

Reiterating that farmers? interests are her top-most priority, Mayawati said since she took the state?s reins in 2007, the government has raised SAP from R125 to R240 per quintal, an increase of 92% in four years. ?It is now time for the mills to start crushing operations full throttle and purchase cane from the farmers so the fields are vacated at the earliest to help farmers take up wheat sowing. Almost 24 sugar mills in western UP have started crushing and the rest should begin in three days, after which we will be forced to take tough action against them,? the chief minister said. She reminded that last year, the government had to punish owners of two mills who did not start mills on time.

Cane commissioner Kamran Rizvi said 103 out of the state?s 126 mills are privately owned, while a sugar federation runs the rest. ?Last year, UP produced 1,050 lakh tonnes of sugarcane; this year, we estimate 1,200 lakh tonnes. Private mills paid farmers R13,000 crore last year, which could touch R15,000 crore this year,? he said. Sugar production could rise to 62 lakh tonnes from last year?s 58.7 lakh tonnes, he added.

While farmers stand to gain from the substantial hike, which will encourage them to sow more next year, the beleaguered sugar industry is fretting and fuming. ?This is going to be very tough for us, especially since domestic sugar prices are not rising. We have to see how to tide over this difficult situation. The only hope is that the industry gets permission to export sugar. We have called a meeting of UP Sugar Millers Association (UPSMA) on November 10,? said UPSMA official.

Indian Sugar Millers? Association director-general Abinash Verma said at this price, the average ex-mill cost of production at 9.3% sugar recovery is R33 a kg, while sugar sells for R29 at the factory gate.

?We will, therefore, run at a loss of R4 for every kg of sugar we produce. How can we make timely payments to farmers or bankers? In either case of non-payment, we will be defaulters,? he said, adding in the last two years, the state government has hiked SAP from R165 to R240 per quintal. ?This is a 46% rise, while the price of sugar has not risen even 5%. The only way to cut our production cost is to reduce our inventory cost by being allowed to export excess stock,? he stated.

It may be mentioned that of the country?s total sugar production of 24.3 mil-lion tonnes in 2010/11, UP had contributed almost 59 lakh tonnes.