Can’t link cane prices to that of sugar, Centre told

Ruchika M. Khanna

Tribune News Service

Chandigarh, April 17

Punjab has refused to accept the Centre’s suggestion on keeping the State Agreed Price (SAP) of sugarcane on a par with the Statutory Minimum Price (SMP) of sugar (as specified by the Centre).

Saying that offering a lower price to farmers on sugarcane would hurt the state’s efforts to diversify its agriculture from the wheat-paddy cycle, the state has instead asked the Centre to explore other ways like procuring sugarcane by the Centre to mitigate the woes of sugarcane growers.

Agriculture Minister Tota Singh, who attended a meeting of state agriculture ministers with the Union Food Minister yesterday, reportedly said it was not possible for Punjab to rollback the price offered to cane growers (Rs285 to Rs295 per quintal, depending on variety) to the SMP of Rs220 per quintal announced by the Centre.

He said the state needed to boost its sugar production to become self-sufficient, besides diversification in agriculture was possible only if the state offered remunerative prices to farmers for crops other than wheat and paddy.

The minister said: “In Punjab, payment worth Rs332 crore is pending on behalf of nine cooperative sugar mills while the seven private sugar mills owe Rs350 crore to farmers. Punjab Agricultural University had recommended that SAP for cane be kept at Rs323 per quintal. But considering the low global prices of sugar, we kept SAP at Rs285-Rs295 per quintal. Instead of the Centre asking us to lower the price, we recommended that the excise duty (Rs97 per quintal) charged by the Centre be done away with”.

As part of its diversification plan, the state has managed to bring 1 lakh hectare area under cane production. However, this year there has been a fall in sugar prices globally, hovering around Rs2,850 per quintal. As a result, the sugar mill which buys cane at Rs2,950 per quintal and after spending another Rs400 on processing, will be able to make sugar at Rs3,350 per quintal, which is Rs350 per quintal more than its retail price. As a result, they are incurring losses and have withheld payments to cane growers.

Punjab’s argument is that just 2 per cent of the total land used for agriculture is under cane production. More than 50 per cent of the sugar consumed in the state comes from other major sugar producing states. So, the only way that the cane production be given a boost is by increasing SAP.

Tota Singh said he had suggested to the Union Food Minister to allow a central agency like the FCI to buy cane from farmers at the SMP announced by Centre, and process it to make buffer stocks of sugar.

“Whenever there is a fall in production, these buffer stocks can be released in the market to correct the retail price,” he added.