Sugarcane farmers and sugar mills have expressed disappointment over the Tamil Nadu government continuing to set a State Advised Price for sugarcane without consulting them.

Both sugar mills’ representatives and sugarcane farmers’ representatives said the government should opt for a tripartite meeting to arrive at a viable pricing based on a revenue-sharing formula.

The State government announced on Tuesday that it had set a State Advised Price of ₹2,850 a tonne for sugarcane for 2016-17, taking into account the statutory Fair and Remunerative Price (FRP) of ₹2,300 a tonne set by the Centre and added ₹550 a tonne, including transport cost.

Industry unhappy The price for the sugar season (October-September) is unchanged from last year.

The sugar industry has expressed disappointment over this move as the price is unviable when seen in the context of low sugar prices. “Last season, the industry had agreed to pay the statutory price plus the transport cost, which worked out to about ₹2,450. The mills do not acknowledge the ‘advisory price’ announced by the State. This year they have decided to pay FRP, transport cost and an incentive of ₹125 taking the total to about ₹2,550,” said a mill representative.

Palani G Periasamy, President, Southern Indian Sugar Mills Association, Tamil Nadu, which represents the private sector sugar mills in the State (it accounts for the lion’s share of sugar produced), said that with prices at about ₹3,300 a quintal, mills are barely covering the cost of production, if at all.

Sales down Also, the VAT levied on sugar in Tamil Nadu makes it uncompetitive as compared with that of its neighbours, and demand has dropped. Demonetisation has also affected sales as sugar purchases are down.

The only viable option is for the government to call a tripartite meeting and arrive at a pragmatic price based on a revenue sharing formula. This will help balance the interest of the farmers and mills, he said. Even the government-controlled cooperative and public sector mills have not been able to pay the SAP and owe farmers crores of rupees, he added.

Hike needed A senior executive said sugar prices need to go up to ₹4,000 a quintal for the mills to pay the SAP. This ad-hoc arrangement by the State has to stop and a viable pricing formula based on sugar prices has to be set, he said.

In Maharashtra and Karnataka, cane prices are at ₹2,475 and ₹2,600 a tonne despite higher sugar yields.

In Tamil Nadu, the sugar recovery percentage is lower at about 9 per cent due to the drought in recent years.

Another industrialist said the State government has indicated in its statement that it will consider a tripartite meeting. This has to be done immediately.

Private mills have declined to pay SAP since 2013-14. Tamil Nadu also has the lowest co-generation power tariff for electricity generated from sugarcane fibre. It is ₹4 a unit compared with ₹6.70 in Karnataka and ₹6 in UP. “A revenue sharing formula will expose why mills cannot pay the SAP,” he said.

RV Giri, National President, Consortium of Indian Farmers Associations, said the State government has to call for a tripartite meeting to arrive at viable cane pricing. Tamil Nadu’s sugar output has halved to about 150 lakh tonnes in recent years. Co-operative mills are cash-strapped.

Related Topics
comment COMMENT NOW