The Hindu Business Line : TN sugar mills seeking support from State Govt

According to the South Indian Sugar Mills Association representatives, the mills here are at a disadvantage as compared to their counterparts in other States, where the Governments have announced support (or at least expressed intention to support) sugar exports or sugarcane payments to farmers. This is in addition to the sugar export subsidy of Rs 1,350-1,450 a tonne announced by the Centre.

They say Tamil Nadu is also hard hit on other fronts as Government policies are tilted against the industry in terms of revenues from by-products. The sugar mills here pay the highest in purchase tax on sugarcane (Rs 60 a tonne); movement of molasses is controlled leading to an artificial glut and crash in prices. Also, the ethanol programme is yet to take off.

Andhra Pradesh has announced a late crushing subsidy of Rs 100 a tonne of sugarcane to mills to compensate for the sugar recovery loss when they crush sugarcane late into the summer. Karnataka too has announced a similar support apart from abolishing purchase tax on sugarcane.

Industry representatives said that Maharashtra has announced a transport subsidy on sugarcane of Rs 2 per km per tonne for moving cane beyond 15 km, a late crushing subsidy and an export subsidy of Rs 1,000 a tonne of sugar.

According to industry sources, all this puts Tamil Nadu at a disadvantage on export price. Buyers quote prices taking into account the subsidy and Tamil Nadu's exporters lose out, they say.

The State Government should come out with an announcement on sugarcane pricing support along the lines of that announced by the others. Purchase tax in Tamil Nadu is the highest in the industry.

The State Government has also not facilitated the launch of the ethanol-blended petrol programme, which would mean additional revenue for the mills. At 5 per cent blending the oil companies would need about 5.8 crore litres ethanol a year for which the price has been fixed at Rs 21.50 a litre.

While the country is looking at a 10 per cent blending of ethanol with petrol, the State is yet to implement even the first phase of 5 per cent blending.

Also, molasses continues to be a controlled commodity. Since the State Government does not permit export or movement of molasses out of Tamil Nadu, the glut has resulted in prices hitting the bottom. There are no takers for molasses at Rs 200 a tonne whereas in the neighbouring States molasses prices are several times more.