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The Tamil Nadu government has fixed the State Advised Price (SAP) of sugarcane for 2014-15 season to September at ₹ 2,650 a tonne, same as last year, attracting the ire of sugar mills and farmers.
Farmers and sugar mills are not happy with the price as it does not cover their cost of production.
While sugar millers say support prices are too high, farmers contend that they are too low. Both agree that having set the sugarcane price without considering their demand, the government should support payments for sugarcane.
In an official announcement, the State government said it has fixed the SAP at ₹2,650 a tonne which is ₹450 a tonne more than the statutory Fair and Remunerative Price (FRP) of ₹2,200 set by the Centre. The SAP includes ₹100 a tonne as cost for transporting sugar.
Last year, the state had increased the SAP by ₹550 including the transport cost, over the FRP of ₹2,100, taking the price in the state to ₹2,650.
A senior representative in the South Indian Sugar Mills Association said the industry is shocked by the state government’s decision. With the sugar prices continuing to decline and currently ruling around ₹2,600, private sector mills have repeatedly expressed their inability to pay anything more than the FRP announced by the Centre.
Mills are keen on paying a remunerative price for sugarcane to support farmers.
With sugar prices ruling low for two consecutive years now, mills are not even able to recover the cost of production.
Private sector mills have been seeking the government’s support to pay SAP to farmers but the industry’s plea has been ignored.
An Association representative said last year that when the average sugar price was around ₹2,800, the industry had managed to pay the statutory price only after the Centre had come out with an excise duty loan that worked out to about ₹300 a tonne of cane.
Mills had paid the farmers around ₹ 2,300-₹2,350 for the cane and had urged the government to pay farmers the rest.
This year, prices are down further by ₹300 a quintal. Cash flow will be negative and there is no way mills can pay farmers the SAP.
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