Sugar cane price: UP farmers settle for Rs 245-250 per quintal

The Uttar Pradesh (UP) government announced the State Advised Price (SAP) for sugarcane procurement on November 8. The procurement rate at Rs 245 to Rs 250 per quintal is a little lower than what sugarcane growers have been demanding. The announcement came just as the sugarcane crushing in the state picks pace. So far, over 25 of the 126 sugar mills have started operations. Twenty-three of the sugar mills in the state are cooperative, public sector mills.

FRP fixed by Centre Year FRP (in Rs) 2007-08 81.8 2008-09 81.18 2009-10 129.84 2010-11 139.2 2011-12 145

The announcement follows negotiations that stretched over weeks. During the talks,  farmers were demanding rates ranging between Rs 250 and Rs 300 per quintal. Bhartiya Kisan Union (BKU) spokesperson Dharmendar Singh says the sugar industry had expressed its inability to pay the rates demanded by farmers. “If you calculate sugarcane cultivation cost, as per the Farmers Commission formula, the cost would be about Rs 350 per quintal,” says Singh.

“There was not much scope for further negotiations because sugar mills generally move court if they find sugarcane prices unviable, and once the matter becomes sub-judice, it means delayed payments to farmers. So we agreed on the price of Rs 250,” adds Singh. But if the sugar prices increase further, the profits should be passed on to the farmers, he says.

In 2010-11, the UP government had announced an SAP of Rs 205 per quintal for normal cane delivered at the factory gates. In 2011-12, UP sugarcane acreage is estimated to rise by over seven per cent to 2.252 million hectares (MH) compared to 2.101 MH in 2010-11. Last year, the sugar production was below 6 million tonnes; this year it is likely to increase to about 6.4 million tonnes.

Pricing mechanism

From 2009-10 season, the Centre had decided to fix the Fair and Remunerative Price (FRP) of sugarcane as the price to be paid by the sugar mills instead of statutory minimum support price earlier. FRP is fixed after taking into consideration the margins for sugarcane farmers on account of risk as well as profit on the cost of production of sugarcane, including the cost of transportation. It also includes a margin of nearly 45 per cent on account of profit and risk to the farmers on the all-India adjusted average cost of production of sugarcane.

How sugarcane price is determined  Fair and Remunerative Price (FRP) of sugarcane is the price to be paid by the sugar mills instead of statutory minimum support price earlier FRP is fixed after taking into consideration the margins for sugarcane farmers on account of risk as well as profit on the cost of production of sugarcane, including the cost of transportation This price is linked to a basic sugar recovery rate (from the sugarcane) of 9.5 per cent, subject to a premium of Rs 1.53 per quintal for every 0.1 per cent point increase in recovery above 9.5 per cent Based on this FRP, state governments work out the State Advised Price (SAP), which is decided after talks with sugar mill owners and sugarcane growers Government of India, in March this year, had determined FRP of sugarcane at Rs 145 per quintal, payable by sugar mills for season 2011-12

Based on this FRP, state governments work out SAP, which is decided after talks with sugar mill owners and sugarcane growers. The decided price is paid by the mill owners to the farmers.

The Government of India in March this year had determined FRP of sugarcane at Rs 145 per quintal, payable by sugar mills for season 2011-12. This price is linked to a basic sugar recovery rate (from the sugarcane) of 9.5 per cent, subject to a premium of Rs 1.53 per quintal for every 0.1 per cent point increase in recovery above the 9.5 per cent level. The FRP this year is 4.2 per cent more than 2010-11. However, farmers across major sugarcane producing states, including Karnataka and Maharashtra, have been demanding an increase of 40-50 per cent when the sugar crushing season has started.

Maharashtra offers less than what Centre recommended

While the farmers in Uttar Pradesh are elated with the price, their counterparts in Maharashtra and Karnataka are protesting and demanding higher prices.  The state governments in Maharashtra and Karnataka have fixed SAP at Rs 144.50 and Rs 180 per quintal respectively.

Sugarcane growers in Maharashtra are protesting and demanding an SAP of Rs 235 per quintal. The state government’s price is 50 paisa less than the price recommended by the Centre. The protests in the state are being led by farmers’ organisation, Swabhimani Shetkari Sanghatana (SSS). The movement is spearheaded by member of Parliament from the state Raju Shetty. SSS activists along with farmers took out rallies across the state including Mumbai during the last week of October to press for higher prices.

Shetty criticised the state government for its decision to pay FRP of Rs 144.50 per quintal to the state's farmers. He said, “The state government has assured to pay the FRP of Rs 144.50 per tonne for the first 9.5 per cent recovery of sugar. But the production cost for sugarcane has increased manifold with the increase in costs of pesticide, fuel and labour,” he said.

Protesting farmers threatened government that if their demands are not met, they would shift to some other crop and it would be difficult for the government to handle domestic sugar demand. Shetty also alleged that several sugar mills in the state have not made any payment to sugarcane growers for the past two years. Demanding immediate payment of arrears, he said, “The Maharashtra government had assured that sugar mills will not be allowed to open this year if the dues are not paid. But some sugar mills have already started functioning.” There are as many as 107 sugar mills in Maharashtra; 35 of them have been closed operations.

Karnataka farmers offered Rs 180 per quintal

Similarly, farmers' organisations, Karnataka Rajya Raitha Sangha (KRRS) and Hasiru Sene, are protesting against the cane price of Rs 180 per quintal being offered in the state. A group of farmers from KRRS staged a dharna on November 2 in Vidhana Soudha, the state secretariat in Bengaluru, after talks failed to resolve the price issue and payment of arrears to farmers from sugar factories. Besides, some cane growers in Bagalkot district are already on indefinite strike for the past three weeks, demanding the Karnataka government revise the price for sugarcane.

Sangha president Kodihalli Chandrashekar says the price of Rs 220 per quintal was justified as farming inputs like fertilizers, seeds and other materials had become expensive in the past few years. Offering just Rs 180 won’t help farmers to sustain the rising cost of inputs, says. He alleges that sugarcane farmers in the state were put to various hardships and were harassed by most of the private sugar mills.

However, in a media statement, Karnataka chief minister D V Sadananda Gowda had reportedly said that sugar mill owners had agreed to pay Rs 180 per quintal of sugarcane and the factories would clear the arrears within two months. As far as protest is concerned, only few farmers were protesting against the Rs 180 price, he is reported to have said.

                                                                                     —inputs from Ashwin Aghor

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