Industry Flags High UP Sugarcane Prices for Falling Sugar ProductionHome

Industry has flagged high sugarcane prices in Uttar Pradesh for falling sugar production. The state is India’s largest sugarcane and second largest sugar producer, respectively.

Sugar prices in the state are among the highest due to high cane prices set by the state government, which has squeezed the mills’ ability to raise prices and improve profitability, a study by Associated Chambers of Commerce and Industry of India (Assocham) has said.

“Along with non-payment of cane arrears to farmers, the delay in crushing operations due to the clash between sugar mills and Uttar Pradesh government at the start of the current sugar season also affected production of sugar in the state,” Assocham Secretary General D S Rawat said.

The study titled ‘Indian Sugar Industry: The way forward’ has been released by Assocham Economic Research Bureau.

Thus, high cane prices coupled with low recovery rate drive up the cost of production and might make mills unviable if prices of sugar and other cane byproducts don't rise accordingly, he said.

Assocham has suggested India switched over from fixed price model and adopted revenue sharing model to help reduce volatility in sugar production.

The study said Uttar Pradesh continues to suffer from lowest sugarcane yield of just about 59 tonnes a hectare, despite commanding the highest share of 45 per cent and 40 per cent in acreage and production, respectively, of the cash crop.

Source: Business-Standard