The SAP rise is intended to benefit sugarcane farmers in UP by giving them higher assured price for their produce. This can boost their incomes. The increased cost of raw material (cane) squeezes margins, especially when sugar selling prices and ethanol procurement rates are not rising equivalently. The UPSMA says the gap (cost vs selling price) is already negative and will worsen. The government has targets for ethanol blending (e.g., in petrol) and the sugar sector is a big feedstock supplier. But if economics are unfavorable—costs rising while prices flat—it can discourage diversion of cane to ethanol and affect the blending goals.
Higher production cost may eventually reflect in sugar prices (though the article suggests sugar prices may remain suppressed because of surplus‑risk). Ethanol cost pressures might also have knock‑on effects in fuel/energy chain or subsidy burdens.
The sugar industry in UP is warned of financial stress since cost of production > selling price + SAP rise makes it hard for mills to absorb the burden. The article points out sugar recovery rates (i.e., sugar yield from cane) have declined, which further increases cost per unit of sugar produced.
On ethanol side: lack of meaningful increase in procurement price from sugar‑based feedstock means that even though costs are higher, returns are muted.
Risk of surplus sugar production: If the diversion to ethanol doesn’t pick up (because of weak economics), the market may face surplus sugar stocks → downward pressure on prices. Will the sugar selling price (or minimum selling price / MSP) be revised upward to reflect higher costs? Whether ethanol procurement prices will be increased meaningfully to maintain viability for mills.
How sugar mills in UP respond: whether they will seek cost containment, reduction in output, or focus more on ethanol diversification. Whether this cost shock translates to higher retail sugar prices (affecting consumers) or is absorbed somewhere in the chain. The impact on cane farmers: while SAP increase helps, if mills struggle it may lead to payment delays or other stresses.
