Uttar Pradesh is reportedly mulling a significant increase in the state-advised price (SAP) of sugarcane for the upcoming 2023-2024 season. Reports suggest that the SAP may be raised by Rs 25 per quintal. This potential adjustment comes at a time when the country is witnessing a surge in sugar prices at the retail level, largely attributed to a weak monsoon season.

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It's worth noting that the last revision of SAP in Uttar Pradesh occurred in September 2021, just months before the 2022 UP assembly elections. This potential adjustment in SAP has sparked discussions and debates within the industry.

However, not everyone in the industry is convinced that such a substantial increase is likely to materialize. Tarun Sawhney, Vice Chairman and Managing Director at Triveni Engineering and Industries, dismissed these reports as mere rumors.

He pointed out that the customary deliberation on sugarcane prices in Uttar Pradesh typically takes place in October, and an increase of Rs 25 per quintal at this stage would be unusually high. Sawhney expressed scepticism about the likelihood of such a significant price hike.

Vijay Banka, Managing Director at Dwarikesh Sugar Industries, highlighted another factor influencing the sugar industry's dynamics. He mentioned that the scarcity of rainfall in Maharashtra has been a cause for concern. The region has experienced a deficit of more than 20 percent in rainfall, covering the months of June, July, and August. This rainfall deficit has undoubtedly impacted the yield and availability of sugar for crushing.

Banka dismissed the issue of SAP as market speculation. He emphasised that the industry's challenges are multifaceted, with weather conditions being a critical factor affecting sugar production.

Several prominent sugar companies, including Balrampur Chini Ltd., Dhampur Sugar Ltd., Dalmia Bharat Sugar, Mawana Sugars, and Dwarikesh Sugar, are closely monitoring these developments, as any changes in SAP can have a substantial impact on their operations and profitability.

The notification issued by the cane development department on February 17 provides some insights into the proposed changes. As per the notification, the SAP for the general variety of cane has been tentatively set at Rs 340 per quintal, with the procurement prices for early and late maturing varieties fixed at Rs 350 and Rs 335 per quintal, respectively.

For more details, watch the accompanying video

First Published:Sept 5, 2023 3:05 PM IST