The Yogi Adityanath government in Uttar Pradesh has announced a hike in the minimum support price (MSP) for sugarcane by ₹20 per quintal for all three categories of the crop for the 2023-24 season. The decision was taken at the state cabinet meeting on Thursday, January 18, in Lucknow. The new MSP will benefit around 4.5 million sugarcane farmers in the state, who are an important electorate for any political party.
New MSP for different varieties of sugarcane
Uttar Pradesh has three varieties of sugarcane: early, ordinary and rejected. The early variety constitutes over 95% of the sugarcane cultivated in the state, followed by 2.7% of the ordinary variety and 0.3% of the rejected variety. The MSP for all three varieties has been increased by ₹20 per quintal.
The new MSP for the early variety of sugarcane is ₹370 per quintal, up from ₹350 per quintal in the previous season. The new MSP for the ordinary variety is ₹360 per quintal, up from ₹340 per quintal. The new MSP for the rejected variety is ₹355 per quintal, up from ₹335 per quintal.
Cumulative increase in MSP by Yogi government
The Yogi government has raised the sugarcane MSP by ₹55 per quintal in the last seven years. It first raised the MSP by ₹10 per quintal in 2017 after coming to power. It further raised the MSP by ₹25 per quintal in 2021 before the UP assembly elections in 2022. The latest hike of ₹20 per quintal comes ahead of the national elections in 2024.
The UP government claims that it has cleared all the pending dues of sugarcane farmers and ensured timely payment of their current dues. It also says that it has taken steps to improve the productivity and profitability of sugarcane cultivation by promoting new varieties, providing subsidies and incentives, and encouraging ethanol production from sugarcane juice.
Comparison with other states and central government
Uttar Pradesh is one of the states that fix their own sugarcane purchase price on the basis of input costs or SAP. Other states follow the fair and remunerative price (FRP) decided by the central government on the recommendation of Commission for Agriculture Cost and Prices (CACP).
The FRP for sugarcane for the 2023-24 season is ₹290 per quintal, which is lower than the SAP fixed by UP and some other states like Punjab, Haryana, Uttarakhand and Karnataka. The FRP is linked to a basic recovery rate of 10%, subject to a premium of ₹2.9 per quintal for every 0.1% point increase in recovery rate.
The UP government says that its SAP is based on the actual cost of production and provides a fair margin to the farmers. It also says that its SAP is higher than the average recovery rate of sugarcane in the state, which is around 11%.