Shares of Uttar Pradesh-based sugar companies rose on Wednesday after the state's sugar mill association signed an agreement with the sugarcane farmers on the price for the ongoing season (October-September 2009-10).
Sugar producers with mills in Uttar Pradesh, India's biggest cane-growing state, will pay growers Rs190 rupees per quintal (100 kilograms), ending a dispute that caused a month-long delay to the start of the season. The price fixed is broadly in line with expectations.
Balrampur Chini was up 3% at Rs138, Bajaj Hindusthan gained 3% to Rs221, Triveni Engineering was up 4% at Rs107 and Dhampur Sugar advanced 5% to Rs136.
The state government had fixed a floor price of Rs165-170 per quintal for sugarcane farmers in the crop year that began on Oct. 1, and the millers had raised the payout to Rs180-185 a quintal but farmers struggling with lower output wanted more.
Newspaper reports say that sugar mills would hold talks on Wednesday with the former Agriculture Minister Ajit Singh, who has been leading the farmers' protest.
Cane crushing in Uttar Pradesh has already been delayed due to the tussle between farmers and sugar mills on the sugarcane price issue, and the farmers have threatened another protest in the state capital from Nov. 26, if their demand for higher price was not resolved.
Parliament proceedings were completely paralyzed last week as sugarcane farmers, with the backing of the opposition parties, protested against a proposed ordinance. The farmers protested against the Sugar Control (Amendment) Order, which proposed a uniform Central Fair and Remunerative Price (FRP) for sugarcane growers. They forced adjournment of both Lok Sabha and Rajya Sabha for the first two days of the winter session, demanding a hike in prices.
Thousands of sugarcane farmers gathered in New Delhi to protest a Rs35 per quintal drop in procurement prices proposed for their crop after an Oct. 21 government ordinance. The Centre had announced a price of Rs129.85 per quintal for sugarcane during the 2009-10 crushing season under the FRP system, while the Uttar Pradesh State Advisory Price (SAP) was set between Rs165 and Rs.170 per quintal.
As per the ordinance, the state government was to make up for any shortfall in the SAP and the FRP. Farmers wanted Rs280 per quintal for their produce.