The Hindu Business Line : N. India mills scramble for sugarcane supplies

AFTER a gap of nearly five years, a fresh `sugarcane war' has seemingly broken out in the North, prompted by a combination of scarce crop availability and State Governments' renewed populist rigour.

The trigger for the latest war has come from the Haryana Chief Minister, Mr Om Prakash Chautala, who with a clear eye on the forthcoming elections to the State assembly, has announced a cane price of Rs 115-117 a quintal to be payable by mills during the 2004-05 sugar season (October-September).

This is as against the existing price range of Rs 104-110 a quintal, which is, in fact, the price that Mr Chautala had declared (`advised') for the 1999-2000 season. At that time, too, it was electoral compulsions that drove Mr Chautala to hike the cane price by a whopping Rs 14 a quintal, though it is a different matter that the price was kept frozen at the new Rs 104-110 a quintal level for the subsequent four seasons. And now, in a virtual repeat of history, the Chief Minister used the occasion of the legendary farmer leader, Sir Chhotu Ram's 124th birth anniversary on November 24 to announce the latest cane price hike.

Besides Haryana, the other State that had resorted to a significant increase in cane prices is Uttaranchal, which has fixed the State Advised Price (SAP) for 2004-05 at Rs 105-110 a quintal, against the previous season's Rs 95-100 a quintal. Uttar Pradesh and Punjab, too, are scheduled to follow suit in the coming week and in the current context, they would probably be left with little option but to emulate the course taken by their neighbours.

Mr Mulayam Singh Yadav's administration in UP is particularly under pressure from his coalition partner and former Union Agriculture Minister, Mr Ajit Singh, to effect a sizeable increase in the SAP, more so after the Allahabad High Court's order last month upholding the State Government's right to fix cane prices over and above the Centre's Statutory Minimum Price (SMP). This followed an earlier Supreme Court judgement on these lines in May.

The UP Government had steadily been raising the SAP of cane from Rs 75-80 a quintal in the 1997-98 season to Rs 80-85, Rs 85-90, Rs 90-95 and Rs 95-100 a quintal for the 1998-99, 1999-2000, 2000-01 and 2001-02 seasons respectively, before the freeze during the last two seasons. But the recovery in sugar prices since the beginning of this year and the recent `favourable' court judgements are seen to have provided a conducive atmosphere to go in for a fresh round of SAP increase, long `politically overdue'.

On top of all this is the decline in overall cane availability due to erratic monsoon rains and diversion in area by growers to other crops such as paddy. This has resulted in mills themselves competing for cane. Even without the State Government announcing the SAP for 2004-05, most mills in UP are already paying Rs 100-105 a quintal for the cane they are buying from farmers this season, which translates into a unilateral increase of Rs 5 a quintal. Some mills in Uttaranchal, including Mahalakshmi Sugar Mills at Iqbalpur and Uttam Sugar Mills at Libberheri (both in Haridwar district), are reported to be offering up to Rs 120 a quintal for cane sourced from neighbouring UP districts, that too on a `nakad' (instant cash) basis.