Explained: Why sugarcane prices have been static for 4 years in Punjab

This price was last raised in 2017-18 and now it’s been four years that the rate of the sugarcane is the same in the state.

The area under cane is almost static too. It was 96,000 hectares in 2017-18 and it is now 95,000 hectares, a decrease of 1000 hectares.

“If the price of the cane is not increased this year the area under sugarcane will go down further in the coming planting season which is a big challenge for the much needed diversification in the state which needs to dedicate around 2 lakh hecatres under it,” said Satnam Singh Sahni, general secretary, Bharti Kisan Union (BKU) Doaba, which is taking up sugarcane farmers’ issues on regular basis and also threatening to start a protest if the price of cane is not increased this year too before the upcoming crushing season scheduled to start in November month.

Punjab’s neighbouring states are paying higher price per quintal, said Sahni , adding that even the Fair Remunerative Price (FRP), decided by the government of India, is increasing to some extent every year or in a couple of years but there is no hike in SAP in the state for the past four years.

FRP, which is fixed under sugarcane control order, 1966, is the Minimum price that sugar mills are supposed to pay to the farmers. But main cane growing states determine their own SAP which is generally higher than the FRP.

What is the SAP of sugarcane in the neighbouring states?

In Haryana is it Rs 345 and Rs 340 per quintal for the early and late varieties, respectively. In Uttrakhand, it is Rs 327 and Rs 317 for early and late varieties and UP offers Rs 325 and Rs 315 for early and late varieties, respectively. Punjab’s rate is lowest among all these four states which come under one agricultural zone. Haryana used to pay Rs 310 per quintal earlier, which is the current SAP in Punjab, in the year 2014-15 to its farmers while the input cost of the cane in both the states is not of much difference.

How is SAP calculated?

In Punjab, the Sugarcane Control Board, which has senior bureaucrats, representatives of sugar mills and farmers as its members, headed by Punjab Agriculture Minister (Punjab Chief Minister Amarinder Singh is holding Agriculture portfolio) decide the price in its meeting. The price is calculated by the experts from Punjab Agriculture University (PAU), Ludhiana, who calculate the entire economics of the crop by taking input cost and then suggest to the government, which may agree or not. Sources said that a couple of years back PAU experts had suggested Rs 343 per quintal but the government did not agree because the sugar mill expressed inability to pay that price due to low prices of sugar and then Rs 310 was decided. The decision of the board on the price is final and it cannot be challenged anywhere. Sources said that the meeting of the board has not taken place for a long time.

Experts said that SAP must be Rs 350 per quintal now to make cane farming viable for the farmers.

What is the input cost of cane?

Farmers said that the input cost per acre in 2017-18 was around Rs 30,000 per Rs 31,000 per hectare, which has now increased to Rs 40,000 per 42,000 per hectare due to increased cost of seed, fertilisers, labour and transportation charges because of the sky high diesel prices. Kamaljit Singh Kaki, the convener of Pagri Sambhal Jatta Lehar, a farmers organisation which has sugarcane growers as its members, said that cane crop needs labour at the time of sowing, binding, and hoeing.

Why is the government not increasing SAP?

Sugar mills express their inability to pay even current SAP to the farmers in Punjab due to which the government is not increasing it.
There are 16 mills in Punjab out of which nine are cooperative mills and seven private mills. The condition of the majority of cooperative mills is not good and their capacity is also very low. Private mills have the monopoly because 70 per cent of the cane of Punjab is crushed by them. Two years back, mills had refused to run these because of high SAP (according to several private Mills) and then Government had to intervene and asked the millers to pay the then FRP, which was Rs 275 per quintal, first and remaining difference of Rs 35 will be paid by the state and millers both to the farmers later out of which Rs 25 and Rs 10 would be paid by the state and the mills, respectively. Experts said that the sugar rates have not increased much in the past few years because of which millers refused to pay SAP.

How can sugarcane be made a profitable venture for farmers, millers and from a diversification point of view?

Experts said that mills should not only be dependent on making and selling sugar but make other products too.

“To make sugar mills profitable which can pay remunerative price to the farmers, and earn profit to the mills, it is very important to produce power by setting up cogeneration plants, ethanol, which is a renewal biofuel, by setting up its plants in mills which has raw material available for it,” said former Cane Commissioner Jaswant Singh, adding that majority private mills in Punjab have set up cogeneration plants now and also some of them are making ethanol and earning good profits by selling these and also these mills are paying farmers on time.

“If Punjab government invests a few hundred crores in cooperative mills to set up such plants these mills will also be in profit and can pay the required price to the farmers and also it will lead to increase area under cane up to 2 lakh hectares which is the need of the state,” he said.

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