Sugar mills threaten closure over cane price

Factory owners to meet in B'lore today to discuss future action

Sugar mills threaten closure over cane price

If the Siddaramaiah government believes that increasing the purchase price of sugar cane could be panacea to the woes of growers, then it seems to be a serious error of judgment.

For, sugar mills are planning to shut down their units and also move court following the upward revision in the purchase price of sugar cane.

The members of South Indian Sugar Mills Association, Karnataka, is scheduled to meet in Bangalore on Monday to chalk out the next course of action as the mill owners are arguing that the purchase price of Rs 2,500 a tonne of sugar cane as announced by the chief minister is on the higher side. For now, private mills in north Karnataka are not willing to pay more than Rs 2,000 a tonne as ex-field price.

The mill owners have decided to request the government to reconsider the price, strictly going by the revenue sharing formula of the Dr Rangarajan committee which says the profit should be shared between farmers and mills in the ratio of  70:30.

The government has violated this. And, if the government wants to be sympathetic to farmers, then it must give Rs 500 per tonne as support price in addition to Rs 150 which has been declared.

If these two things are not done, then the association is going to seek a court stay on the implementation of the government order of November 23 fixing the purchase price at Rs 2,500. In addition, they are planning to shut their factories immediately.

They say that the ‘arbitrary’ decisions taken by the government can’t be imposed on sugar industry when there is a glut in sugar production of one lakh mt in the state and the price of sugar has touched as low as Rs 26 a kg. For a private factory, the cost of purchasing a tonne of cane comes to Rs 3,000. In addition to Rs 2,500, it spends nearly Rs 500 as handling charges which includes bringing sugar cane from the field to the factory.

Profit sharing

The decision taken by the government is legally binding on the mills as per the Sugar Cane Purchase and Supply Act, 2013.

However, the Act has stipulated that the revenue sharing formula should be 70:30. Siddaramaiah has declared in the Assembly that penal action would be taken against those industries which fail to pay Rs 2,500. But, the mill owners are arguing that price is fixed on an ad hoc basis.

Vidya Murkumbi, chairperson, Sri Renuka Sugars, who is the voice of the strong lobby of private sugar mills, said Siddaramaiah has not understood how the factories function in North Karnataka.

“After Monday’s meeting, we will meet the chief minister on Tuesday to submit our views as to why arbitrary decisions of the government can’t be implemented. If he fails to respond by December 7, first thing we will do is to close our units because we can’t keep purchasing the cane when we are already in doldrums.

Then, we will approach court because the Sugar Act is being violated by the government.

The present price will make us to suffer a loss of Rs 400 to Rs 600 a tonne. In Uttar Pradesh, sugar mills have shut down due to a similar problem,” she said.

Industry’s view

Parappa Savadi, president, Krishna co-op sugar factory said no farmer had asked the government to fix the price at as high as Rs 2,650 a tonne. “Farmers are happily selling their produce for Rs 1,800-Rs 2,000. Should we be pushed to close our business and trouble farmers?”

Basavaraj Balekundargi, chairman, Someshwara co-operative sugar factory said: “About 18,000 farmers are selling cane at Rs 2,000 a tonne to our mill. They know that factories are in distress due to the glut in production.”

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