Sugar factories in Karnataka have been asked to start crushing sugarcane latest by November 30, after paying Rs. 2,100 per tonne towards old dues to farmers. They have been given the leeway to pay the remaining Rs. 400 out of the fixed Fair and Remunerative Price (FRP) of Rs. 2,500 per tonne in a staggered manner.
H.S. Mahadeva Prasad, Minister for Cooperation and Sugar, said that a formula for payment of dues had been arrived at in a meeting of stakeholders on Tuesday. He said of the Rs. 400, Rs. 200 per tonne is to be paid in a month after the opening of the factory and the remaining Rs. 200 over two crop years in two instalments.
Tax holiday
The government has extended the tax holiday to sugar factories (road cess, purchase tax and VAT) for three years to help them clear their dues to the farmers. The minister said that action would be initiated against factory owners who do not start crushing past the deadline set, even with the waivers announced.
The minister argued that this formula was arrived at “in the interest of farmers” whose standing crops in about 4 lakh hectares in Karnataka would wither if not harvested immediately. He contended that this “did not amount to yielding to the sugar factory owners”, who had submitted to the government on Tuesday that they were not in a position to clear all dues in one go, given the slump in sugar prices in the international market.
Earlier, the High Court of Karnataka had upheld the price fixed by the government and dismissed the petitions filed by the South India Sugar Manufacturers’ Association (SISMA). The minister said that notices had been served to sugar factories to adhere to the price fixed and criminal proceedings initiated against some.
Asked why then the government was obliged to provide tax concessions and give additional time for payment, he said that the farmers’ own priority, as expressed in the meeting, was that crops should be harvested immediately. “We are not letting anyone blackmail us,” he said.
New formula
The minister said that the problem in payment to sugarcane farmers will not arise in the coming seasons because the new legislation – Karnataka Sugarcane (Regulation of Purchase and Supply) Act – proposes the forming of an expert committee for calculation of actual realisation in sugar factory, based on which a revenue-sharing formula will be arrived at. The committees, comprising farmers, factor owners, experts and government representatives, will meet thrice in a year.
Currently, of the 63 sugar factories in Karnataka, only 30 have begun crushing this season so far. Only four factories – two of which are in government control – have cleared all their dues to farmers, the minister admitted.
