The Hindu Business Line : TN sets sugarcane price at Rs 1,034

Chennai, Nov. 16 The Tamil Nadu Government has set sugarcane price for the 2007-08 season at Rs 1,034 a tonne linked to a sugar recovery of 9 per cent.

According to industry representatives this would effectively mean that, unless the State Government announces the concessions and support sought by the industry, sugar cane price has been set at unviable high levels. Sugarcane in the State would be disproportionately higher and make the industry uncompetitive against other sugar-producing States.

According to an official press release, the State Government has added Rs 222.20 over the Statutory Minimum Price (SMP) of Rs 811.80 a tonne of sugarcane announced by the Centre. This takes the State Advised Price (SAP) to Rs 1,034 a tonne.

For the current season the SMP and SAP are Rs 9 a tonne higher than that announced last year. The Tamil Nadu Government has also announced an incentive price of Rs 9 a tonne for every additional 0.1 percentage point increase over the 9 per cent recovery.

Industry reacts

Reacting to the hike announced by the State Government, Mr N. Ramanathan, Vice-President, South Indian Sugar Mills Association - Tamil Nadu, said that the sugarcane price in the State would be higher by Rs 200 a tonne as compared to other sugar producers including Karnataka, Andhra Pradesh and Maharashtra.

The industry was looking forward to the support measures sought from the Government for the mills to remain viable and avoid negative cash flows.

The association had represented to the Government that with sugar prices ruling at a low of Rs 1,200 a quintal, sugarcane prices would have to be pegged around Rs 700-750 a tonne. This is based on the costs for the mills, which incur a conversion cost of a minimum of Rs 350 a tonne of cane to make sugar and a purchase tax of Rs 65 a tonne paid to the Government.

SISMA-TN had said that either the sugarcane price has to come down or the State Government would have to announce support measures such as waiver of purchase tax and grant of export incentives along the lines announced by other State Governments.

More Stories on : Sugar | Agricultural Policy | Tamil Nadu

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