UP sugar mills want status-quo on SAP due to rising cost of production
Private sugar mills in Uttar Pradesh have urged the state government not to hike the State Advised Price (SAP) for sugarcane in the 2024-25 season, citing rising production costs due to lower recovery rates, increased freight, and higher input expenses. Despite growing costs, sugar prices remain stagnant, and mills face additional challenges like molasses pricing and wage hikes.
Amid murmurs of discontentment among farmers, private sugar mills in Uttar Pradesh have approached the state government not to implement any further hike in advised price (SAP) for cane for the 2024-25 season as falling recovery rates have significantly pushed up their production costs.
Sugar season runs from October to September.
Sources said the sugar mills in the private sector, which constitute bulk of the state’s annual sugar production said in the current 2024-25 sugar season recovery has dropped by a steep 0.3-1.0 per cent which has pushed up their production cost by an average Rs 140 per quintal (assuming average recovery drop to be 0.4 per cent).
The millers also said that while one hand production costs have risen on the other hand there has not been any significant rise in sugar prices till the end of December 2024 as compared to the same period last year.
Recovery rate is the quantum of sugar derived after processing a definite weight of sugarcane.
UP, along with Punjab, Haryana and Uttarakhand have their own price at which sugar mills have to purchase cane from farmers which is called SAP.
In the 2023-24 sugar season, the Uttar Pradesh government had raised the state advised price (SAP) of all sugarcane varieties by Rs 20 per quintal to Rs 370 for early sown varieties.
UP is one of India’s largest sugarcane-producing states in the country and home to the largest number of private sugar mills in the country.
Of the total 120 sugar mills in UP, the private sector leads with roughly 93 plants, followed by the cooperative sector with 24 units and UP State Sugar Corporation (UPSSC) with 3 units.
Nearly 5 million farm households are directly associated with sugarcane farming in UP and cane by-products including sugar, ethanol, molasses etc generate an annual economy of over Rs 50,000 crore in the state.
Meanwhile, the UP Sugar Mills Association (UPSMA) in their representation to the state government also said that SAP should also not be raised as the minimum sale price of sugar has not been revised since 2019 that has made the cost of availing loans against it higher.
On the increase in production cost, the millers said production costs have also risen due to low rate of transport rebate being allowed despite much higher increase in freight cost.
The millers also said that another reason for increase in the cost of production of sugar is the low administrative price for molasses reserved for the country in comparison to its real market price which leads to mills losing around Rs 110 for each tonne of cane crushed.
The salary burden on sugar mills has also increased by almost 12 per cent due to implementation of wage board settlement.
The cost of inputs like consumables such as lubricants have also increased which has further pushed up production cost and packaging costs have risen due to mandatory jute packaging norms.
“In view of all these it is strongly requested to keep the State Advised Price (SAP) of sugarcane unchanged for 2024-25 as the industry is in no position to afford another hike in costs,” the UPSMA letter said.
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Source : Business Standard
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