Business Daily from THE HINDU group of publications
Wednesday, Oct 11, 2006
Agri-Biz & Commodities - Agricultural Policy
Government - Politics
Decision on cane SAP put off on UP municipal polls
Mills are in no hurry to buy cane this time as supply is seen ample.
Late crushing means cane area wont be vacated for next crop.
New Delhi , Oct. 10
The uncertainty over cane price payable to growers by sugar mills in Uttar Pradesh for the 2006-07 crushing season has deepened with the announcement of elections to urban local bodies in the State.
"Since the model code of conduct has already come into effect and would apply till November 3, there is no question of declaring any State Advised Price (SAP) for cane before the first week of next month," officials said.
For the 2005-06 season (October-September), the SAP was pegged at Rs 115 per quintal for common cane and Rs 120 per quintal for early maturing varieties.
However, with mills competing with each other for cane, they actually ended up paying up to Rs 128 per quintal. Further, in order to secure maximum cane, the factories began crushing in October itself.
Things are altogether different this time round. First, there is no shortage of cane, with the State Cane Commissioner projecting adequate supplies to ensure a sugar output of 73 lakh tonnes (lt), as against 58 lt during 2005-06.
Second, the bull run in sugar has subsided, with average ex-factory realisations likely to fall to around Rs 1,600 per quintal from Rs 1,750-1,800 per quintal in the previous season.
As a result, mills have shown no urgency in taking the season early.
In fact, only late last month, the likes of Bajaj Hindusthan, Triveni Engineering & Industries, Simbhaoli Sugar Mills and Dhampur Sugar met to agree not to start crushing before November and also not to engage in any pre-emptory cane price war. "The local body polls have in a way helped because the State Government can always cite it as a reason for not declaring cane prices," sources pointed out.
Late crushing and delay in SAP announcement have, in turn, shifted the pressure on to the growers.
"There is desperation building on two counts. Firstly, they are keen to plant wheat this time, as prices are good. But that cannot happen unless the cane area is vacated. Secondly, farmers need the sugarcane top as fodder for their animals and that again requires the crop to be harvested. As it is, they are suffering from a shortage of fodder," the sources added.
But there is still hope for the farmer in the form of elections to the State Assembly, slated for end-February or early-March.
"We hope the ruling Samajwadi Party wins the municipal elections hands down. If it loses, there will be the temptation to go in for a big cane price hike, which would be disastrous for us," a miller remarked.
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