Indian sugar mills association

Tamil Nadu sugar mills take Karnataka's help to manage farmers' expectations and finance

Date:	02 Oct 2015

Source:	The Economic Times

Reporter:	Bharani Vaitheesvaran

News ID:	4822

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CHENNAI: Sugar producers in Tamil Nadu find themselves where they were exactly a year ago - swamped in their own produce, losing money in the sale of every kg of sugar, farmers collectively owed Rs 900 crore, and mulling the right cane pricing to begin production for the next year.

But this time around, their doubts could get cleared in the way some south Karnataka mills on the same rocky boat have tackled the situation and just begun crushing for the next year.

"The special crushing season in Tamil Nadu got over in the last week of September. Through October we will study how mills in Karnataka have found a way to bridge the gap between farmer expectations and their own financial position to pay for the cane," said a top executive of a large private sugar manufacturer in Tamil Nadu running nine mills in south India. Karnataka, the third largest producer after Maharashtra and Uttar Pradesh, is estimated to produce 46 lakh tonnes of sugar in the coming year. Similar to Tamil Nadu, the sugar mills in the state are engaged in a wrangle with farmers over the price of cane and arrears that have now mounted over Rs 2,500 crore.

In southern Karnataka, mills have taken a two pronged approach to begin the new year. Firstly, they brought the farmers on board by paying an advance of Rs 1,500 a tonne. The move comes with a rider that any shortfall from the Fair and Remunerative Price should be met by the Central Government. To get judicial backing for this idea, they have approached the state high court seeking directions to the centre create a fund to remunerate farmers.

"The central government had fixed base price at Rs 2,430 for a tonne of cane considering a sugar price of Rs 32 a kg, which we don't find in the market," said M Srinivaasan, MD of Sri Chamundeswari Sugars, which runs sugar mills in south Karnataka and in Tamil Nadu. Prices now hover around Rs 24 a kg.

Srinivaasan added that farmers had agreed to send their cane because they have no choice. "There are acres of standing cane and dues piling up. The centre's soft loan of Rs 6,000 crore will not have half of the expected effect because banks are not willing to lend to an NPA sector."

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