If Retail Sugar Price is to remain in check then FRP cannot go very high even if Farmers want it. Basically Government is opening the door for imported cane. That will subdue cane prices in India for the long term. This is good for sugar companies. How long this policy will last we don`t know. But it will dislodge the UP government. It helps UPA. So win-win for Sugar and UPA. Law is now on the side of Sugar companies. Even with imported cane they are making huge margins.
Any policy decision by govt or agitation by farmers cannot remove d real shortage of sugar .Next month sugar prices r going to touch 40/kg and benefits wl go to sugar cos.
Well Sugar companies do benefit. But Govt has increased the Levy Quota too. Cane is imported as there is a shortage of Cane in India.
Shortage cannot go away, but if cane prices become market driven, there is more incentive to start new sugar mills. If new players get in the margins will get lower, sugar prices will be less volatile. Companies will invest in storage. Incentive to farmers to grow more cane.
Basically a more free market for Sugar. This is a positive for an sector and for the economy as a whole (But this takes about 4-5 years to be actually realised).
Uttar Pradesh has raised the price mills must pay cane farmers by 17-18%, striking the middle ground between demands of tillers and millers and disappointing both, government and industry officials said. Sugarcane growing states will have to bear the burden of the price difference between the Union government and the state government fixed cane purchase price, an official statement said on Monday.
In U.P.every year there is agitation by farmers 4 more cane price and being a votebank State govt always forced mills to pay higher prices by announcing higher SAP.Now with FMP state power has been curtailed since any diffrence btwn FMP and SAP has to b borned by state and not mills.Sugar mills r now free of state dictate and there4 wl gain more.At FMP of 130 cost of prod is Rs 17/kg.Imagine d profits of sugar cos atleast this year.
look what happen in hurry to give this type of interview
Political Bureau,The Economic Times, 16th Nov, 2009
NEW DELHI :THE farmers’ protests in Uttar Pradesh over the sugarcane purchase price fixed under the Centre’s new Fair and Remunerative Price (FRP) ordinance has put Congress in a bind. The matter has become a rallying point for all opposition parties in the BSPruled state, forcing Congress to devise ways to get round the Centre’s order.
It is evident that the party, which wants to make the best of the momentum provided by its recent victory in the Ferozabad parliamentary bypoll, has been forced to play on the backfoot on the issue of cane pricing. AICC general secretary Digvijay Singh, who met agriculture minister Sharad Pawar last week along with Congress UP chief Rita Bahuguna Joshi, told ET that it was a “misconception created by opposition parties” that the government had formulated a policy which would entail the sugar mills paying the farmers a paltry Rs 129.85/quintal for cane, as set out under the FRP system. He described this amount as merely the “floor price” and said the farmers would get much more. The party has directed its district-level functionaries to hold talks with mill owners to negotiate a better purchase price for sugarcane, Mr Singh said.
With the farmers refusing to budge from their demand of Rs 280/quintal, the Centre has been left with little recourse but to intervene. Mr Pawar’s entreaties to mill owners and farmers to resolve the matter at the earliest have yielded little result. Though the mills have now agreed to pay Rs 180/quintal, the farmers are not ready to back down.
Many farmers’ groups are now all set to bring their protests to the Capital under the aegis of the Bharatiya Kisan Union (BKU) of Mahendra Singh Tikait. The matter is likely to continue embarrassing Congress in UP as the issue is also likely to be brought up in the upcoming winter session of Parliament by parties such as SP and BJP, not to mention BSP which has opposed the FRP on the ground that it requires the state government to bear the difference between the Centre’s price and the State Advisory Price (SAP).
On Sunday, RJD too joined in the protests. It threatened to withdraw support from the UPA government if the Centre failed to ensure “adequate prices for sugarcane” in UP. RJD general secretary Ashok Singh alleged that Centre was working against the interests of farmers.
BKU’s Rakesh Tikait said as the policy adversely affected the cane farmers across the state, it would soon take a bigger shape. “We have to get united against the sugarcane pricing policy of the Central and the state governments,” Mr Tikait told agencies recently. Ajit Singh’s RLD, which is strong in the Jat-dominated Western UP belt, has also been at the forefront of the protests.
Even SAP, which is usually higher that the price fixed by the Centre and sets the bar for the minimum price to be paid to farmers by the mill, is not fair to the farmers, they say. Even states like Maharashtra, which usually pays less than UP for cane, is now paying Rs 200/quintal
It is all politics.One should know that farmers has no choice but to harvest cane and deliver to mills bcs farmers need their land again to sow wheat 4 Rabi.All this dharana or opposition wl b over in 2-3 days after politicians pocker money from mills.This is happening in every scarcity year.Till v hv a sugar tycoon as food min.mills hv no worries.
todays fall is a knee jerk reaction, anyway companies pay much more than SAP / FRp to the farmers , sugar price being a sensitive issue for the GOvt. there will be many such intermittent falls during next 2 yrs. but withstanding all these all sugar companies will definitely hit life time highs, simply b`coz sugar prices will be high, bajaj hindustan above 550, balrampur above 250. renuka above 500. pick any , it won`t make much of a difference.
The government plans to end the logjam on sugar pricing by scrapping clause 3(B) of the Sugarcane Control Order, 1966, which makes it mandatory for the state governments to bear the difference between the fair and remunerative price (FRP) and the State Advisory Price (SAP).
SP Tulsian says post the repealing of clause 3(B) profits of sugar companies would shrink by Rs 3 per kg this season.
Despite all this, he adds that sugar companies will make a profit of Rs 4 per kg on a rack rate of Rs 33 per kg.
To put things in perspective, Uttar Pradesh, India`s second-largest sugar producer, has announced a SAP of Rs 165 per quintal. However, farmers are demanding a price of Rs 210 per quintal.
The Centre`s fair and remunerative price stands at Rs 130 per kg. Earlier, the Rs 35 difference between the FRP (Rs 130) and SAP (Rs 165) was paid by the state government. The difference (Rs 45) between SAP (Rs 165) and the current price (Rs 210) was borne by mill owners, if paid at that price.
The government now wants mill owners to bear the entire difference (Rs 80). Tulsian feels this is a practical solution which would help end the impasse.
| NIFTY 
