Govt decides to seize sugar, auction it

The measure is expected to bring some relief to farmers

The State government, caught in the crossfire between the sugarcane growers and sugar factory owners, has decided to seize sugar in 45 factories and auction it. 

A decision to this effect was taken at a meeting held by Chief Minister Siddaramaiah with sugar factory representatives in the City on Wednesday. 

The measure, it is said, may bring some relief to farmers. But this would also mean that sugar would be sold at as low as Rs 15 a kg or lesser. The prevailing rate is about Rs 19.50 a kg against the price of Rs 32 some weeks ago. 

Siddaramaiah is said to have taken the factory owners to task for not clearing the dues of Rs 925 crore to farmers for the year 2013-14. However, the factory owners expressed helplessness to make the payment.

Briefing the media after the meeting, Sugar Minister H S Mahadeva Prasad said it is inevitable for the government take the decision to seize sugar  though the factories are facing difficulties. Recovery certificates have been issued to all the factories a fortnight ago and the process of seizure has started, he added. 

Owing to circumstances

The minister said about 30 lakh metric tones of sugar, worth Rs 6,000 crore, is yet to be sold by factories. Sugar may be auctioned at very low rates  owing to circumstances. The government has already paid Rs 1,170 crore to farmers last year, he said. 

Prasad said shutting down the sugar factories would not serve any purpose as there is an excess production of 70 lakh MT (of sugarcane) which has to be crushed. 

The decision of the government has not brought cheers to the factory owners. A majority of them are facing the heat from banks for defaulting on repayment of loans. They are finding tough to export sugar as the prices of crashed in the national and international markets. 

Purchase tax

They have demanded that the government to continue to levy the ‘purchase tax’, which has been waived in a majority of the states. Instead of waiving it in the State, the government should tax the factories for the next three years, instead of seizing the stock, they added.

Of the 63 factories, five have cleared the dues while 13 factories have moved the court with regard to the price fixed (Rs 2,500) for the year 2013-14. 

As the court has said that the government should review the matter properly before initiating any action against these 13 factories, a decision would be taken on whether to bring down the price fixed at the meeting of the Karnataka Sugarcane Regulation Board, chaired by Minister Prasad, on Thursday.