The Hindu Business Line : Talks on sugarcane payment modalities

THE Tamil Nadu Government will discuss with private sector sugar mills the modalities of paying farmers the State advised price (SAP) for sugarcane, said the Chief Minister, Ms J. Jayalalithaa.

A minister-level meeting would be organised with private sector sugar mills on October 6, she said. Addressing the assembly, the Chief Minister said that the Government had announced an SAP of Rs 1,014 a tonne linked to a sugar recovery of 9 per cent with an incentive of Rs 8.80 for a 0.1 percentage-point increase in recovery. The SAP was higher as compared to the statutory minimum price (SMP) of Rs 795 a tonne fixed by the Centre. The State Government had fixed the SAP based on a Supreme Court ruling that State governments can fix SAP for sugarcane.

On May 5, 2004, the Court had ruled that it is not illegal for the State Governments to notify the SAP and advise sugar factories to comply. The SAP can serve as a framework for an agreement on sugarcane pricing between the farmers and mills. Once an agreement is reached, the mills are bound to pay the price and the authorities can take action in case of default. The State Government has focused on encouraging the production of value-added products such as ethanol and increasing efficiency in sugar mills. Thus, the mills are in a position to pay farmers the SAP.

The State Government had held discussions with farmers and sugar millers and had arrived at the SAP while taking into account the permission granted to sugar mills to produce ethanol and co-generate power, she said.

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