UP has highest cumulative cane price arrears at Rs 4,688 crore till 2020-21 sugar season

Cumulative arrears payable to farmers in India till Sept 30, 2021 were Rs 8,616 crore

Uttar Pradesh has the highest cumulative sugarcane price arrears in India till the end of the 2020-21 sugar season (September 30, 2021). According to the data compiled by the Commission for Agricultural Costs and Prices (CACP) in its ‘Price Policy for Sugarcane: 2022-23 Sugar Season’, as on September 30, 2021, the total cane price arrears were Rs 8,616 crore. Out of the total arrears, Rs 6,258 crore accounts for the 2020-21 sugar season, which is significantly lower than Rs 10,342 crore for the 2019-20 season.

CACP mentioned that among all the Indian states, Uttar Pradesh accounts for 54.4% (Rs 4,688 crore) of the cumulative cane price arrears. Other states with high cumulative sugarcane arrears are Tamil Nadu at Rs 1,644 crore (19.1%), Gujarat at Rs 844 crore (9.8%) and Maharashtra at Rs 542 crore (6.3%).

The CACP has stated that surplus production and lower sugar prices in domestic and world markets have led to record cane arrears during the last 2-3 years, which is not in the interest of both farmers and sugar mills creating trust deficit between them.

In the pricing policy for 2022-23, the commission has again reiterated to the Indian government that the sugar mills should follow the Fair and Remunerative Price (FRP) to pay the cane farmers.  The FRP is determined based on recommendations of the CACP and after consultation with the state governments and other stakeholders.

While the Indian government announces the FRP to be paid by the sugar mills to the farmers, several states of the country have their own mechanism to determine the rates for sugarcane to be paid to the growers. It is called state advised price (SAP). In its ‘Price Policy for Sugarcane: 2022-23 Sugar Season’, the CACP has again recommended that the states should stop fixing the SAP.

The commission stated that four states governments — Haryana, Punjab, Uttarakhand and Uttar Pradesh — intervene in sugarcane pricing by announcing the SAP, which remains higher than the FRP. “Since sugar mills are required to pay SAP, which is higher than the FRP, it results in mounting cane price arrears to farmers, especially when sugar prices are low. Due to the increase in sugar recovery rate, the difference between SAP and FRP has significantly reduced in Uttar Pradesh in 2020-21. However, during 2021-22, with the recent announcement of UP government hiking SAP for all three categories, the gap between SAP and FRP has again increased,” it stated in the pricing policy for 2022-23.

Details of cane price arrears

State Up to 2018-19 (Rs crore) 2019-20 (Rs crore) 2020-21* (Rs crore) Cumulative (Rs crore) Cumulative (percentage)
Uttar Pradesh 42 0 4,646 4,688 54.4%
Gujarat 36 0 808 844 9.8%
Maharashtra 317 0 225 542 6.3%
Tamil Nadu 1,453 0 191 1,644 19.1%
Andhra Pradesh 38 43 76 157 1.8%
Karnataka 38 6 64 108 1.3%
Chhattisgarh 8 0 64 72 0.8%
Haryana 0 0 63 63 0.7%
Uttarakhand 205 0 52 257 3%
Punjab 0 43 52 95 1.1%
Telangana 0 0 11 11 0.15
Bihar 89 39 5 133 1.5%
Other states 2 0 1 2 0%
All India 2,228 131 6,258 8,616 100%

Note: *as on September 30, 2021 for sugar season 2020-21
Source: Directorate of Sugar & Vegetable Oils, Ministry of Consumer Affairs, Food & Public Distribution


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