UP sugar mills reach agreement with farmers on cane price

Even with the cancellation of an all-party meeting scheduled for Wednesday to discuss the pricing of sugar, an association of UP sugar mills reached an agreement with farmers in the state.

As per the agreement, UP farmers would get Rs190-195 per quintal on sugarcane which is about Rs25 more than the state-administered price (SAP) of Rs165 per quintal.

Though the farmers were demanding Rs280 per quintal, it was expected that the pricing would be arrived at around Rs210 per quintal.

According to S P Tulsian, investment advisor, the sugarcane pricing is a positive outcome for sugar companies as the cost of producing sugar which is Rs27 per kg and the cost of levy sugar at Rs5 per kg add up to yield a margin of Rs6 per kg.

Shares of UP-based sugar companies rose on Wednesday on news of the state's sugar mill association having reached an agreement with the sugarcane farmers on the price for the ongoing season (October-September 2009-10).

Sugar producers with mills in UP will pay growers Rs190 per quintal ending a dispute that has simmered for a month and causing a delay to the start of the season. The price which has been finally fixed has been in line with expectations.