While private sugar factories in Andhra Pradesh are busy doing the math to arrive at a price to be offered for the crushing season that has just started, those in cooperative sector are struggling to get their numbers right to survive. The sector has been languishing so much that a good number of them depend on Government support to pay salaries, forget about running them.
All but one of the 11 factories in the cooperative sector have poured out their financial woes to the Sugar Minister, Dr J Geeta Reddy, at a recent review meeting. It was only Chodavaram Cooperative Sugar Factory (Visakhapatnam) that presented a healthy picture. Three out of the 11 factories are already declared defunct, with some others on ventilator, virtually.
The Government, which had pumped in Rs 100 crore in the last one year alone, is in no mood to listen to the sob stories. “You should tighten your belts. Perform or perish,” that was the stern message from the Government.
The total crushing capacity (tonnes a day) of cooperative sector is put at 19,200 tcd as against private sector's 93,050 tcd. If you add capacity of three joint venture units, the total crushing capacity of 31 factories in the State stands at 1,20,750 tcd.
SISMA (South India Sugar Mills Association) figures put the total cane area at 1.96 lakh hectares in 2010-11 as against 1.80 lakh ha in the previous year.
The area, however, is expected to come down drastically, with farmers in most parts moving to other crops protesting against poor returns. Some of them are planning to go for a crop holiday.
Problems
Lack of direction, poor management bandwidth, shortage of working capital and investments are needed for upgradation to go for co-generation (power generation at sugar factories).
“The fact that only two of the 18 co-gen facilities and that none of the 9 distillery units are in this sector reflects the reality. Unless we move up the value chain it is very difficult to survive forget about thriving,” a top manager of a coop sugar factory said.
Poor financial performance has forced the factories to pay lesser money to farmers for cane than their counterparts in the private sector. While the average payment made by factories in the State was put at Rs 1,996 a tonne (excluding purchase tax reimbursement component of Rs 60), most cooperative factories are giving at least Rs 200 less.
With farmers demanding for Rs 2,500-3,000 a tonne, these factories could find hard to up their purchase price. Finding them in a spot, the State Government had announced a special grant of Rs 50 crore to give Rs 200 a tonne to farmers under these factories.