• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

R. Balaji

UP, Maharashtra units make headway with State support

Chennai May 16 Sugar mills in Tamil Nadu have lost their traditional markets in Kerala and Kolkata to mills in other States that are backed by subsidies from their respective governments.

Subsidies support

The Tamil Nadu Government has to suspend the Rs 60 a tonne purchase tax levied on sugarcane for at least two seasons, allow free movement of molasses and support the ethanol programme for the sugar mills to be able to sell sugar and make payments to sugarcane farmers, according to South Indian Sugar Mills Association representatives.

The subsidies announced by the other State governments help support the sugarcane payment to farmers. Sugar mills are taking a hit as sugar prices have crashed to about Rs 1,250 a quintal - the price at which sugar mills are buying a tonne of sugarcane. Subsidies have become essential for cash flow to the mills, they say.

In Tamil Nadu, according to sugar mills representatives, there is discontent brewing among the sugarcane farmers as dues are mounting.

Surplus sugar

Sugar mills in Tamil Nadu would have produced over 26 lakh tonnes of sugar by September 30 this season and the output in the next season is expected to be around the same level. This is against an annual consumption of about 11 lakh tonnes. The surplus sugar is huge and the options to move them out are limited.

For the Tamil Nadu mills, the surplus sugar, the standing cane and the failure to start the ethanol-blended fuel programme is a major cause for concern.

Markets lost

Apart from meeting the market demand within the State, traditionally, the Tamil Nadu mills moved sugar to Kerala and Kolkata to meet the demand in the east. However, mills in the other States supported by their government subsidies have edged Tamil Nadu sugar out from these markets.

Uttar Pradesh, for instance, announced a slew of concessions for the new capacities in sugar mills. All the new mills have been able to capture the Kolkata market and the rest of the markets in the East.

Sugar from Maharashtra and Karnataka are moving into the Kerala market. Maharashtra, for instance, has waived purchase tax and announced Rs 1,000 a tonne of sugar as export subsidy. Karnataka has announced similar levels of support as also Andhra Pradesh.

According to sugar mill representatives in Tamil Nadu, the State is the third largest producer of sugar after Uttar Pradesh and Maharashtra and is among the leading sugar exporters. But today, it has been edged out of the domestic market leave alone exports, they said.

Ethanol programme

Further, the other means of revenue have also been blocked for the mills in Tamil Nadu. While the Central Government and State governments elsewhere are pushing for the ethanol programme, Tamil Nadu is yet to encourage it. Oil companies are buying a litre of ethanol at Rs 21.50 for blending with petrol. But in Tamil Nadu, the programme is yet to take off.

Molasses, the raw material for ethanol, was building up at the mills, which are not allowed to move it out of the State. Molasses prices in Tamil Nadu have crashed. There are no takers for molasses at Rs 200 a tonne against that in other States where molasses prices are ten times higher.

More Stories on : Sugar | Agricultural Policy | Tamil Nadu

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Heat wave unrelenting along TN, AP coasts

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line