Uttar Pradesh has long been India’s sugarcane powerhouse. Over the last few years, the state government has tried to turn this natural strength into a more predictable and rewarding livelihood for millions of cane farmers. A new sugarcane policy framework – combining higher prices, stricter payment discipline, digital tracking and fresh investment in mills and bio-energy – is at the heart of this shift.
This article explains what has changed, why it matters, and what to watch next for farmers, mills and policy makers.
Why Sugarcane Matters so much to Uttar Pradesh
Uttar Pradesh is the largest sugarcane-producing state in India by a wide margin. In 2022-23 the state produced more than 2,250 lakh tonnes of sugarcane, ahead of Maharashtra and Karnataka.
Official data from the state cane department shows:
- Around 29.5 lakh hectares under sugarcane.
- Average productivity of roughly 832 quintals per hectare.
- More than 120 operational sugar mills in recent crushing seasons.
Sugarcane is not just another crop in this mix. A recent report from the state planning department estimates that agriculture contributed about 16.8% to Uttar Pradesh’s GSDP in 2023-24, with the crop sector adding nearly ₹4 lakh crore. Sugarcane alone accounts for close to one-fifth of this crop value.
Simply put, even small improvements in cane pricing, productivity or payment timelines have an outsized effect on rural incomes and consumption in the state.
A New Sugarcane Policy Built on Four Pillars
The recent policy announcements and administrative changes can be grouped under four broad pillars.
For the 2023-24 crushing season, the Uttar Pradesh cabinet raised the State Advised Price (SAP) for sugarcane by ₹20 per quintal across varieties.
- Early-maturing varieties: from ₹350 to ₹370 per quintal.
- General/common varieties: from ₹340 to ₹360 per quintal.
- Late or unsuitable varieties: from ₹335 to ₹355 per quintal.
This sits above the central Fair and Remunerative Price (FRP) of ₹315 per quintal announced for the same season.
More recently, for the 2025-26 season, the state has approved a further ₹30 per quintal increase, taking early-ripening cane to ₹400 and regular varieties to ₹390 per quintal. This steady upward movement in SAP is meant to compensate farmers for rising costs of fertiliser, labour and diesel, and to keep cane competitive against alternative crops.
Price is only one side of the story; timing is equally important. Historically, delays in cane payments could run into months, pushing farmers toward informal lending at high interest rates.
Since 2017 the state government has tightened enforcement of a 14-day payment rule, backed by:
- A dedicated monitoring cell that tracks mill-wise payment performance.
- Penalties, recovery proceedings and, in extreme cases, action against mills that default.
- Special drives to clear legacy arrears from previous seasons.
Press reports and government briefings indicate that cumulative payments to cane farmers since 2017 now run into several lakh crore rupees, with season-wise payments of around ₹36,000 crore in 2023-24 alone.
The newspaper campaign by the state government highlights a clear focus on boosting yields and cutting farm-level drudgery. Initiatives include:
- Promotion of high-yielding varieties and better agronomic practices to raise productivity.
- Use of drones for spraying and crop monitoring in sugarcane fields.
- Demonstrations and training on modern harvesting equipment.
These efforts are gradually reflected in state statistics, where cane production, area and productivity have all trended upward over the last few years even as other states have seen more volatility.
The policy framework also leans heavily on diversification beyond crystal sugar. Sugar mills are encouraged to invest in:
- Ethanol production from molasses and syrup, leveraging national biofuel blending targets.
- Compressed biogas (CBG) plants using press mud and other residues.
- Co-generation of power and sale of surplus electricity to the grid.
This reduces the sector’s dependence on sugar prices alone, supports national energy security goals, and opens additional revenue streams that can, in theory, be shared with farmers through better prices and timely payments.
Digital Backbone: Smart Sugarcane Farmer System
One of the most distinctive features of Uttar Pradesh’s approach is the use of digital platforms to manage the cane-to-sugar chain.
The “Smart Sugarcane Farmer System” and associated portals/apps (often referred to as e-Ganna or Smart Ganna Kisan) now underpin most field-to-factory processes:
- Cane survey and reservation are carried out online, mapping each farmer’s plot to a designated purchase centre and time slot.
- The old paper-based permit is replaced with system-generated “smart slips” sent through SMS or available on the mobile app.
- Weighment details, cane receipts and payment status are visible to farmers in real time.
- Payments are routed directly to farmers’ bank accounts via DBT, reducing leakage and dependence on middlemen.
- Farmers can raise complaints related to weighing or payments through the portal, with time-bound resolution.
For a smallholder in a remote village, this means fewer visits to mill offices, less room for manipulation of weights or dates, and clearer records for follow-up. For the government, it enables mill-wise tracking of crushing, recovery and payments at a level of detail that was not possible a decade ago.
Infrastructure Push: Mills, Logistics and Rural Jobs
Parallel to price and digital reforms, the state has also invested in physical infrastructure for the cane economy. The campaign material points to:
- New sugar mills being set up in high-potential cane zones.
- Restart of closed or sick units after restructuring.
- Capacity expansion in dozens of existing mills to handle higher cane volumes.
- Approvals for CBG plants and ethanol units within integrated complexes.
From a rural development perspective, this infrastructure supports year-round employment in transport, maintenance, logistics and ancillary services. For farmers, having a functioning mill within reasonable distance reduces transport costs and delays, while diversified complexes (sugar + ethanol + CBG) are generally better placed to absorb short-term price shocks in any one product.
How these Reforms Change the Farmer’s Reality
The combined effect of higher SAP, stricter payment discipline, digital transparency and infrastructure support shows up in four practical ways for farmers:
- Higher Gross Income per Hectare
With SAP now well above the FRP and productivity crossing 800 quintals per hectare on average, sugarcane currently offers relatively high gross returns compared with many alternative crops in western and central Uttar Pradesh.
- More Predictable Cash Flows
When the 14-day payment rule is enforced and monitored, cane farmers can plan loan repayments, input purchases and household expenses better. The reduction in arrears reduces reliance on informal moneylenders and the associated interest burden.
- Lower Transaction Costs and Information Gaps
Farmers know in advance when and where to deliver cane, can verify weights and see payment status on their phones. This reduces time spent in queues and disputes and gives smallholders similar access to information as larger growers.
- New Livelihood Opportunities
Expansion of mills, ethanol units and CBG plants creates jobs for tractor owners, transporters, mechanics, skilled technicians and local service providers. Drone-based services, custom hiring of machinery and input retail all open up ancillary income streams for rural youth.
Emerging Challenges and What to Watch
While the reform story is largely positive for farmers, there are emerging stress points that policy makers and industry will need to manage carefully.
First, several industry associations have flagged the pressure that rising SAP places on mill economics, especially when sugar prices are soft. A recent representation from the Uttar Pradesh Sugar Mills Association suggests that the latest ₹30 per quintal SAP increase could raise sugar production costs by over ₹250 per quintal, at a time when ex-mill prices are already below cost. Sustained financial stress at mill level can ultimately feed back into delayed payments or under-investment in modernisation.
Second, while cane area and production have risen, sugar output has not increased in proportion. Between 2017-18 and 2024-25, state data shows that cane acreage went up and total cane production grew strongly, but sugar output actually fell by more than 20 per cent, largely due to lower recovery and diversion of cane to Khandsari and jaggery units which pay faster. Balancing the interests of farmers, mills and traditional sweeteners will remain a policy tightrope.
Third, sugarcane is a water-intensive crop. Climate variability, including episodes of drought and excess rainfall, is already visible in several growing regions. Further gains in productivity will need to come from water-efficient varieties, better irrigation practices and crop diversification in marginal cane areas, rather than simply expanding area.
Finally, diversification into ethanol and bio-energy brings its own set of regulatory, pricing and environmental questions. Ethanol procurement prices, export policies for sugar, and norms for CBG and waste management will all influence the long-term sustainability of this model.
How HMSA can Help
If you have a sugar mill, farm-produce organisation or are an investor evaluating opportunities in the sugarcane value chain, HMSA Consultancy brings hands-on support across strategy planning, performance improvement, and transaction support. We develop evidence-based business plans for new sugar, ethanol and bio-energy projects, size markets with defensible assumptions, design operating models and KPIs for cane-to-cash processes, optimise cost and working capital, and run end-to-end diligence and deal support for brownfield acquisitions or PPP structures. To explore how these levers apply to your context, reach out for a focused discussion with our senior team.
A Promising but Delicate Balancing Act
In our view, Uttar Pradesh’s sugarcane reforms represent one of the more integrated attempts in India to align farmer welfare, digital governance and industrial diversification in a single sector. The gains for farmers, higher prices, quicker payments and better information, are real and visible. At the same time, rising SAP and falling recovery rates are squeezing mill margins, while climate and water risks are becoming harder to ignore.
The next phase of policy will need to move from headline price announcements to a more nuanced balancing of three objectives: remunerative cane prices for farmers, financially viable mills capable of investing in modern technology, and a cropping pattern that is sustainable in water-stressed districts. If Uttar Pradesh can get this balance right, its “sweet boost” for cane farmers can become a durable model for other agrarian states to study and adapt.
Reference: Hindustan Times
