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LATEST NEWS UPDATES | UP cane farmers, mills lobby govt for good price

UP cane farmers, mills lobby govt for good price

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published Published on Oct 20, 2010   modified Modified on Oct 20, 2010

The Uttar Pradesh government is expected to soon announce the price at which mills in the state will have to buy sugarcane from farmers. Having received a record Rs 260 per quintal for sugarcane last season, farmers are insisting on a similar payout this season.

The figure will be keenly watched because high raw material costs can substantially reduce profitability of companies in a season of bumper sugar production and low retail prices. UP is India’s second largest sugar producer and has the highest concentration of privately owned mills.

During the last sugar, the Mayawati government had fixed SAP — the price at which millers are mandated to buy cane from farmers — at Rs 165 per quintal, which was an increase of Rs 25 per quintal over the previous season (2008-09). As the 2009-10 season progressed, the government announced a bonus of Rs 25 per quintal which took the official price to Rs 190 per quintal. Millers vied with each other in buying and paid prices as high Rs 260 per quintal. In some areas, farmers managed to get Rs 290 per quintal.

Given the record prices they got last year, farmers are unwilling to settle for anything less than Rs 250-260 per quintal. However, given the steep correction in sugar prices, millers say they cannot pay such prices. “It all depends on sugar prices. The ex-factory price of sugar is around Rs 27.50 per kg right now. If prices remain steady or slightly lower than this figure, we would be okay with paying Rs 190 per quintal.

But sugar prices may well go down when fresh arrivals start. Given estimates of a good production year, that is a distinct possibility. So cane prices should be fixed considering both the current price of sugar and the expected correction in prices a few weeks later,” said a sugar mill executive.

Millers in meetings with state government officials have demanded that the SAP be fixed at Rs 180 per quintal which would keep business profitable.

Prominent cane farmer and politician VM Singh said millers want to manipulate and suppress the prices of cane and mills would continue to make profit even if they pay prices demanded by farmers. He said that if farmers do not get prices similar to what they got last year, they would protest and refuse to sell cane.

Mr GSC Rao, president of the Sugar Technologists Association of India , said that if the government allows sugar exports, mills would be willing to pay much higher prices to cane farmers. “We have artificially suppressed sugar prices by banning exports. If exports are allowed, prices of sugar would increase and we would be able to pay higher prices to farmers. Both the millers and farmers would be happy.”


The Economic Times, 21 October, 2010, http://economictimes.indiatimes.com/news/economy/agriculture/UP-cane-farmers-mills-lobby-govt-for-good-price/articleshow/6783464.cms


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