The Hindu Business Line : TN no to price cut; support for sugar mills to be considered

THE private sector sugar mill managements in Tamil Nadu have sought the State Government's support in paying the sugarcane price fixed by it for the 2005-06 season.

According to sources in the know, at the meeting between the Government authorities and the representatives of the private sector sugar mills, the South Indian Sugar Mills Association, millers had expressed their concern about the State Advised Price (SAP) of Rs 1,014 a tonne linked to 9 per cent sugar recovery for sugarcane.

The authorities are believed to have stated that the price would not be rolled back but the Government would consider their request for concessions. No commitments were, however, made, sources said.

The SAP was Rs 219 more than that fixed by the Central Government as the Statutory Minimum Price for the season.

They said that the price was unviable and would make the industry in Tamil Nadu uncompetitive as compared to other major sugar producing States like Uttar Pradesh, Maharashtra and Andhra Pradesh, where the mills either received incentives or taxes were lower.

Tamil Nadu was among the highest in levying tax on sugarcane, the mill representatives had said.

For instance, on every tonne of sugarcane the mills paid a total of Rs 93 including purchase tax of Rs 60 apart from turnover tax and cess.

The purchase tax in Maharashtra was Rs 25 and in Andhra Pradesh the purchase tax of Rs 60 was diverted to farmers as part of the sugarcane price.

Uttar Pradesh has come out with incentives to help sugar mills expand capacities.

The mills are also concerned that the price once set for sugarcane will have to be matched or hiked in the coming years irrespective of sugar prices.

Also, the hike announced this season comes at a time when the sugarcane availability is expected to touch a peak.

So prices are going up when the supply of raw material is expected to be in surplus, they said.

Sugar mills expect cane sugar production to be about 18 lakh tonnes in Tamil Nadu, which represents a sugarcane production of about 180 lakh tonnes.

This means that sugar production is hitting the levels prior to the drought over the last few years.

Sugar prices are bound to drop but raw material prices are on the increase, they said.

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