Haryana currently offers one of the highest sugarcane prices in the country, prompting farmers in border villages to divert their crops to its sugar mills, according to two people familiar with the development.
The state recommended price is the minimum price set by the state government that sugar mills have to pay farmers for their sugarcane.
While Uttar Pradesh has set sugarcane SAP at ₹400 per cent 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 cent for early varieties and ₹408 per cent for late varieties.
Although the immediate impact of crop diversion on the amount of sugarcane sold locally may not be significant, the policy implications are significant. The trend could put pressure on other states to raise cane prices or reevaluate public procurement policies to ensure farmers are better paid and not motivated to cross state lines in search of higher payouts.
“The difference in ₹15 per quintal is enough to sway a farmer’s decision, especially when input costs have increased. But it is viable only when the farm field is within 20 km of the mills,” said Ranbir Singh, a sugarcane farmer and president of the Saharanpur-based Kisan Nyay Morcha farmer group.
Sugar mills in western Uttar Pradesh — especially in districts like Saharanpur, Shamli, Baghpat and Muzaffarnagar — are facing the problem of this interstate price war, said the first of two people quoted earlier, both of whom spoke on condition of anonymity. Many of these districts share borders with Haryana, making it easier for farmers to transport sugarcane across state borders.
“Farmers are keen on lucrative returns, especially as input costs have shot up. Haryana’s faster payment mechanism is another incentive,” this person said.
The Uttar Pradesh government is monitoring to ensure that the farmers of the state do not transfer sugarcane to neighboring states.
“We are keeping a vigil so that farmers do not sell their crop in Haryana. To discourage farmers from selling their crop outside the permitted framework (of the state), we are making sure that the mills make timely payments to them,” said a senior official of Uttar Pradesh’s sugar industry and sugarcane development department on condition of anonymity.
Queries emailed to the Haryana Agriculture Department remained unanswered till press time.
Farmers said that even in the past, growers in border villages used to sell their produce across state borders, depending on which state offered higher SAP. “Over the past few years, input costs have increased, so farmers tend to sell where they get better remuneration,” said Ravi Singh, a farmer from Gangoh tehsil in Saharanpur district.
Deepak Ballani, CEO, Indian Sugar Mills Association (ISMA), said: “As per the policy of the Government of Uttar Pradesh and Haryana, sugarcane growing areas are demarcated and reserved on a factory and farm basis. This structured reservation system ensures that each sugar mill has a dedicated sugarcane supply area, leaving minimal scope for any legal cane diversion.”
According to the second person, the difference in SAP between Haryana and Uttar Pradesh is approx ₹15 per cent. Any attempt to move cane across state lines without authorization would also incur additional transportation costs, effectively offsetting the marginal price differential to some extent.
“Consequently, such movements, if any, are expected to be limited in volume and not significant enough to affect plant operations in western Uttar Pradesh. Therefore, ISMA does not anticipate any material impact arising from the current situation,” Ballani said.
The Indian Sugarcane (Control) Order, 1966 demarcates sugarcane growing areas on the basis of factories and farmers to ensure proper supply. Under the policy, specific areas and farmers are allocated to sugar mills, with agreements prohibiting growers from selling cane to other mills or jaggery units. However, Haryana sugar mill officials deny allegations that they are buying sugarcane from farmers in Uttar Pradesh.
“Sugarcane growing areas are clearly demarcated and divided based on factories as well as farmers. However, factory owners cannot stop buying if farmers mix their own production with that of their relative based in a neighboring state as it is very difficult to detect,” said a senior official of a private sugar mill, on condition of anonymity.
Experts believe the situation underscores the need for greater harmonization of prices 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, a farm expert and former member of the Uttar Pradesh Planning Commission.
“The development points to a deeper structural challenge in India’s sugar sector – balancing farmer interests with mill viability in a competitive, state-regulated pricing environment,” Panwar added.
In Uttar Pradesh, the area under sugarcane in the 2025-2026 sugar season has come down to 22.57 million hectares from 23.30 million hectares last season. However, the overall condition of the stand is significantly better than last year. Uttar Pradesh’s gross sugar production is estimated at 103.2 million tonnes compared to 101.01 billion tonnes last year, according to ISMA. Similarly, sugarcane area in Haryana is around 72,000 hectares as against 82,000 hectares last year. Last year’s sugar production was 58.42 million tonnes.
Meanwhile, the National Federation of Cooperative Sugar Factories Ltd. (NFCSF), the apex body representing farmers’ cooperative sugar mills across India, urged the Center to carry out an immediate upward revision of the minimum selling price (MSP) of sugar. ₹41 per kg in view of rising production costs, falling ex-factory sugar prices and increasing financial pressure on sugar mills and sugarcane growers. MSP for sugar in India stagnates ₹31 per kg from February 2019.
The NFCSF welcomed the government’s decision to allow the export of 15,000 tonnes of sugar for the 2025-26 sugar season, saying the move reflected the Centre’s continued commitment to empowering sugarcane farmers and supporting the sugar sector. However, in a press statement, the federation warned that export facilitation alone will not be enough to address the deepening liquidity crisis facing sugar cooperatives.
Despite the encouraging production trend, the financial outlook of sugar mills remains under great pressure. According to the federation, the all-India average mill sugar prices have almost come down ₹2,300 per tonne since the start of the season and are currently hovering around ₹37,700 per tonne, adversely affecting the liquidity of mills and their ability to ensure timely payments of cane dues.
Harshvardhan Patil, NFCSF president, said cooperative sugar mills are owned by millions of farmers and sustaining the current pace of the sugar season requires decisive support from the government at this critical juncture. He noted that early action will enable mills to meet cane payment obligations, protect farmers’ incomes and maintain confidence in the sugar cooperative framework.
Sugarcane production in India has increased over the past five years, except for a slight decline in 2023-24. Production increased from 4,053.99 million tonnes in 2020–21 to 4,546.11 million tonnes in 2024–25, an overall increase of 492.12 million tonnes. According to the Union Agriculture Ministry’s first advance estimates for 2025-26, sugarcane production is expected to increase further to 4,756.14 lakh tonnes.
