New Delhi: With Uttar Pradesh chief minister Mayawati announcing a support price of sugar cane in the state that is 72% higher than what the Union government announced in March, the latter is under pressure to revise its price ahead of polls in six states by December and the general election by May.

The support price of Rs140 per quintal (100kg) in India’s most populous state comes into effect for the sugar season starting October and ending September 2009. The Centre had announced a support price of Rs81.18 a quintal. Support price is what sugar mills have to pay farmers.

While the Centre’s support price, called statutary minimum price, or SMP, is a country benchmark, sugar-producing states can fix their own support price, also known as state-advised price, or SAP, for their cane growers.

Sop story: Mayawati. Nand Kumar / PTI

Sugar mills in Uttar Pradesh are, understandably, not happy with the high SAP. “This is a political gimmick. The way sugar prices have been going down, we will not be able to pay arrears to farmers," an executive at a leading sugar company operating in the state said, requesting anonymity.

In the last season that ended in September, SAP in Uttar Pradesh was Rs125 a quintal while SMP was Rs81 a quintal.

Uttar Pradesh, which contributes 45% to the country’s sugar cane production, is not the only state to announce high SAPs.

On Tuesday, while Tamil Nadu chief minister M. Karunanidhi announced a support price Rs105 per quintal, the Haryana government, led by Bhupinder Singh Hooda, declared it will fix the highest SAP in the country.

SMP is usually fixed on the basis of recommendations by the Commission for Agricultural Costs and Prices, or CACP, a body that advises the government on prices of foodgrains. However, this time, the government ignored the suggestions CACP made.

“The government had not made any effort to implement the suggestions made in our report. We are now trying to galvanize political support so that the government would listen to us," said T. Haque, former CACP chairman who had recommended a support price of Rs155 a quintal.

“The (agriculture) minister (Sharad Pawar) did call a meeting some days back to evaluate SMP, but he concluded that an SMP of Rs155 a quintal was quite high. Thereupon, some thinking of revising SMP has been on, but the ministry has not arrived at a figure," said a senior agriculture ministry official, asking not to be named. “This is a politically sensitive issue."

Meanwhile, Pawar called a meeting of the Indian Sugar Mills Association, or Isma, on Wednesday to review the current situation in the sugar and sugarcane industry. “It was a routine meeting," said an Isma representative, who did not wish to be named.

In the last sugar season, the Centre had announced interest subvention—a technical term for subsidizing interest payments—to sugar companies for raising loans in order to pay arrears. This was because in 2006-07 and 2007-08, supply of sugar was more than its demand by more than 5 million tonnes (mt). This time, the government expects both production and consumption of sugar to be some 22-23 mt.

K.P. Narayana Kumar and PTI contributed to this story.