A few months ahead of the crucial 2024 Lok Sabha elections, the Uttar Pradesh government today hiked the sugarcane price by Rs 20 per quintal (100 kg) for the different categories of the cash crop.
Almost 5 million farm households are associated with sugarcane farming in UP, and sugarcane byproducts including sugar, ethanol, molasses etc generate an annual economy of almost Rs 50,000 crore in the state.
With the latest hike decision of the UP cabinet, the State Advised Price (SAP) for cane in UP increases from Rs 350 per quintal to Rs 370 for early maturing varieties; from Rs 340 to Rs 360 for common varieties; and from Rs 335 to Rs 355 for late maturing or unsuitable sugarcane varieties.
SAP is the price paid by mills to farmers against cane procurement. It is more than the cane fair and remunerative price (FRP) for cane announced every year by the Centre.
In February 2023, the Yogi Adityanath government had kept the SAP unchanged for the 2022-23 crushing season.
UP sugarcane payments during the current crushing season 2023-24 are expected to top Rs 36,000 crore. Last year, sugar production stood at nearly 10.7 million tonnes (MT).
Of the total 120 sugar mills in UP, the private sector leads with 93 plants, followed by the cooperative sector with 24 units and UP State Sugar Corporation (UPSSC) with 3 units.
Owing to the coming Lok Sabha polls, it was anticipated that UP would increase the SAP to keep the farm community in good humour with the incumbent Narendra Modi government at the Centre seeking a third consecutive term at the helm.
Interestingly, the state sugar mills had urged UP to keep the SAP unchanged in view of an uptick in production costs and muted international market dynamics.
UP is India’s top sugarcane, sugar and ethanol producer. The annual sugar season (Oct-Sep) starts from October 1 and continues till April-May the following year or till the crop supply persists.
In the crushing season 2022-23, sugarcane area and sugarcane production in UP was estimated at 2.85 million hectares and 235 MT respectively.
The Yogi government had last revised SAP in September 2021 in the run up to 2022 UP assembly elections.
Molasses is used in the production of ethanol, which is fast becoming a major constituent of the sugar byproduct basket.
Ethanol is used in blending with fossil fuels. The current level of ethanol blending at 12 percent is targetted to touch 20 percent by 2025. This will provide a sustainable revenue stream to mills and facilitate prompt farm payments.