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Sugar industry in Tamil Nadu is under strong pressure from the State government to pay last three years’ cane dues to farmers.
The new government formed last month held its first meeting with sugar industry representatives today.
The Industry Minister MC Sampath and senior officials met sugarcane farmers and senior executives of mills represented by the South Indian Sugar Mills Association separately at the Secretariat.
According to reliable sources, the government urged the sugar mills to pay arrears totalling about ₹1,500 crore, including the recommendatory State Advised Price (SAP) of ₹900 crore and the statutory Fair and Remunerative Price (FRP) of about ₹550 crore owed by a few mills. The government has taken the stand that any support to the cash-strapped industry will follow only if sugarcane dues are paid.
For instance, in 2015-16, the State government pegged the sugarcane SAP at ₹2,850 a tonne, against the Centre-fixed FRP of ₹2,300 which is mandatory. In the previous year, it was ₹2,650 a tonne with the FRP at ₹2,200.
Price declineOver the last few seasons, sugar prices had dipped to lows that resulted in mills losing up to ₹500 on every tonne of cane crushed. As of now, with sugar prices at ₹33 a kg, sugar mills representatives say they are at just above breakeven levels.
Sugarcane farmers are also under pressure as cultivation costs are on the increase.
The industry represented that the State government support the industry in sugarcane payment and bring in a revenue sharing formula for sugarcane based on sugar prices.
Pricing mechanismRV Giri, General Secretary, Consortium of Indian Farmers Associations – Tamil Nadu, said the mills owe farmers more than ₹1,200 crore towards sugarcane payment since 2013-14 season. The farmers have also demanded the payment of additional cane price for 2004-05 to 2008-09 season under an earlier pricing mechanism. These arrears amount to about ₹ 450 crore.
The farmers asked the government to allow sugar mills to participate in the ethanol-blended fuel programme which will augment revenue to the industry and improve liquidity.
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