The ₹15 Question: Why Is Sugarcane Leaving Uttar Pradesh For Haryana?

(MENAFN- Live Mint)

Sugarcane farmers in Uttar Pradesh (UP) are selling their produce to mills in neighbouring Haryana, attracted by the latter's higher state advised price (SAP).

Haryana currently offers one of the highest sugarcane prices in the country, prompting farmers in border villages to divert their crop to its sugar mills, according to two people familiar with the development.

State advised price is the minimum price fixed by a state government that sugar mills must pay to farmers for their sugarcane.

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While Uttar Pradesh has set the SAP for sugarcane at ₹400 per quintal for early-maturing varieties and ₹390 per quintal for common varieties for the 2025–26 crushing season, the Haryana government has raised the SAP to ₹415 per quintal for early varieties and ₹408 per quintal for late varieties.

Although the immediate impact of crop diversion on the quantity of sugarcane sold locally may not be significant, the policy implications are substantial. The trend could put pressure on other states to increase cane prices or revisit procurement policies to ensure farmers receive better remuneration and are not incentivised to cross state borders in search of higher payouts.

“The difference of ₹15 per quintal is enough to influence a farmer's decision, especially when input costs have surged. However, it is only viable when the farmer's field is within 20 km of the mills," said Ranbir Singh, a sugarcane farmer and president of the Saharanpur-based Kisan Nyay Morcha, a farmers' group.

Sugar mills in western Uttar Pradesh-particularly in districts like Saharanpur, Shamli, Baghpat and Muzaffarnagar-are facing the issue of this inter-state price war, the first of the two persons cited earlier said, both of whom spoke on the condition of anonymity. Many of these districts share borders with Haryana, making it easier for farmers to transport cane across state lines.

“Farmers are inclined towards lucrative returns, especially when input costs have surged. Haryana's faster payment mechanism is an additional incentive," said this person.

The Uttar Pradesh government is keeping a watch to make sure farmers of the state do not divert sugarcane to neighbouring states.

“We are keeping a vigil so that the farmers do not sell their crop in Haryana. Also, to discourage farmers from selling their crop outside the permitted framework (state), we are ensuring that payments are made to them on time by mills," a senior official in Uttar Pradesh's Sugar Industry and Cane Development Department said on the condition of anonymity.

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Queries emailed to the Haryana agriculture department remained unanswered till press time.

Farmers said that even in the past, cultivators in border villages have sold their produce across state lines, depending on which state offered a higher SAP.“Over the past few years, input costs have increased, so farmers tend to sell where they receive better remuneration," said Ravi Singh, a farmer from Gangoh tehsil in Saharanpur district.

Deepak Ballani, director general of Indian Sugar Mills Association (ISMA), said,“In accordance with the policies of both the Uttar Pradesh and Haryana governments, sugarcane cultivation areas are demarcated and reserved on a factory-wise and farmer-wise basis. This structured reservation system ensures that each sugar mill has an earmarked cane supply area, thereby leaving minimal scope for any cross-border movement of cane on legal grounds."

According to the second person, the difference in the SAP between Haryana and Uttar Pradesh stands at approximately ₹15 per quintal. Any attempt at unauthorized cane movement across state borders would also involve additional transportation costs, effectively offsetting the marginal price differential to some extent.

“Consequently, such movements, if occurring, are expected to be limited in volume and not significant enough to affect the operations of mills in western Uttar Pradesh. Accordingly, ISMA does not foresee any substantial impact arising from the current situation," said Ballani.

India's Sugarcane (Control) Order, 1966 demarcates sugarcane cultivation areas on a factory-wise and farmer-wise basis to ensure orderly procurement. Unde this policy, sugar mills are allocated specific areas and farmers, with agreements prohibiting cultivators from selling cane to other mills or jaggery units. However, officials at Haryana's sugar mill deny allegations that they are buying sugarcane from farmers in Uttar Pradesh.

“Sugarcane cultivation areas are clearly demarcated and allocated on a factory-wise as well as farmer-wise basis. However, the factory owners cannot stop buying if the farmers mix their own produce with their relative's produce residing in neighbouring state, as its very difficult to ascertain," said a senior official at a private sugar mill, requesting not to be identified.

Experts believe the situation underscores the need for greater price harmonisation across states and a review of the SAP mechanism to ensure a level-playing field.“Unless Uttar Pradesh revises its SAP or strengthens its payment system, the diversion trend may continue," said Sudhir Panwar, farm expert and former member of the Uttar Pradesh Planning Commission.

“The development highlights a deeper structural challenge in India's sugar sector-balancing farmer interests with mill viability in a competitive, state-regulated pricing environment," added Panwar.

In Uttar Pradesh, the cane area has declined to 22.57 lakh hectares in the 2025-26 sugar season from 23.30 lakh hectares last season. However, the overall condition of the standing crop is significantly better than last year. The gross sugar production in Uttar Pradesh is estimated at 103.2 lakh tonnes, compared to 101.01 lakh tonnes last year, according to ISMA. Similarly, the area under sugarcane in Haryana is around 72,000 hectares compared to 82,000 hectares last year. The sugar production last year was 58.42 lakh tonnes.

Meanwhile, the National Federation of Cooperative Sugar Factories Ltd. (NFCSF), the apex body representing farmer-owned cooperative sugar mills across India, has urged the Centre to undertake an immediate upward revision of the Minimum Selling Price (MSP) of sugar to ₹41 per kg in view of rising production costs, declining ex-mill sugar prices, and mounting financial stress on sugar mills and sugarcane farmers. The MSP for sugar in India has been stagnant at ₹31 per kg since February 2019.

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Welcoming the government's decision to permit 15 lakh tonnes of sugar exports for the sugar season 2025–26, NFCSF stated that the move reflects the Centre's continued commitment towards empowering sugarcane farmers and supporting the sugar sector. In a press statement, the federation, however, cautioned that export facilitation alone will not be sufficient to address the deepening liquidity crisis faced by cooperative sugar mills.

Despite the encouraging production trend, the financial outlook for sugar mills remains under severe stress. According to the federation, the all-India average ex-mill sugar prices have declined by nearly ₹2,300 per tonne since the beginning of the season and are currently hovering around ₹37,700 per tonne, adversely affecting mill liquidity and their ability to ensure timely payment of cane dues.

Harshvardhan Patil, president, NFCSF, said that cooperative sugar mills are owned by millions of farmers, and sustaining the present momentum of the sugar season requires decisive support from the government at this critical juncture. He noted that early action will enable mills to honour cane payment commitments, protect farmer incomes, and preserve confidence in the cooperative sugar framework.

Sugarcane production in India has risen over the past five years, barring a slight decline in 2023-24. Output increased from 4,053.99 lakh tonnes in 2020-21 to 4,546.11 lakh tonnes in 2024-25, an overall rise of 492.12 lakh tonnes. According to the Union agriculture ministry's first advance estimates for 2025-26, cane production is projected to increase further to 4,756.14 lakh tonnes.

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