Shares of sugar companies were on a high, rallying between 2 per cent and 10 per cent on Thursday after sugar prices on the National Commodity and Derivatives Exchange (NCDEX) got locked in an upper circuit. Centre looks to fix sugar problem in Uttar Pradesh, orders Yogi government to implement Rangarajan formula. After fulminating against errant sugar mills for not paying farmers their dues, the UP government may finally address the real problem of forcing sugar mills to pay too much money to sugarcane farmers. All states, and UP is the guiltiest, fixed a State Administered Price (SAP) that was higher than the FRP, and that was the genesis of increasing farmer arrears. While the UPA had come out with the Rangarajan formula on revenue-sharing between the mills and farmers, states like Maharashtra and Karnataka accepted this, but UP did not. As FE pointed out, over the past five years, UP’s sugarmills paid around Rs 19,000 crore extra to the farmers as compared to a situation where the Rangarajan formula had been adopted. In the season beginning October 2017, the FRP is Rs 255 and the SAP Rs 305—given the current recovery levels of 10.61%, the gap is a much lower Rs 20 per quintal. So, if Yogi Adityanath is able to make the transition quickly, farmers will adapt to the new model—if the sugar cycle changes, as it does from time to time, the sugar mills will not be forced to pay out extra and this will not, once again, lead to the old arrears-agitation-crackdown cycles.