A group of eight sugar mills from Tamil Nadu has made a distress call to the State Government, asking for a slew of relief measures without which they will be unable to pay farmers the state-fixed price for sugarcane.

The producers are currently being squeezed by a rule that allows States to fix cane rates to help farmers earn more. The state price, known as ‘state advised price’ or SAP, is generally higher than the price fixed by the Centre. With sugar prices plunging, companies generally suffer a pile-up of dues to growers, commonly known as ‘arrears’.

In December, Chief Minister Jayalalithaa announced a hike of Rs. 550 in the procurement prices of sugarcane, ordering the fixing of a SAP of Rs. 2,650 per tonne for 2013-14.

 “The current financial health of the sugar industry is so badly impaired on account of unviable sugar prices that the payment of cane price… is unaffordable today.  As such, the industry finds itself in the unenviable position of having to resist any hike in cane price,” said the petition, signed by the heads of EID Parry, Thiru Arooran Sugars, Kothari Sugars, Bannari Amman Sugars, Rajshree Sugars, Ponni Sugars, Dharani Sugars and Sakthi Sugars.

The group has put forward three relief measures that would allow the private sugar mill industry in Tamil Nadu to bridge part of the deficit.

 “We would like a direct subsidy to be given to the sugarcane farmer, of the order of Rs. 150/MT, which would cost the State around Rs. 150 crore,” the letter said. In States such as Karnataka, the government extends a direct subsidy to the sugarcane farmer, who thus receives an aggregate cane price of Rs. 2650/MT.

 The second proposed relief measure is that the purchase tax and cane cess for 2013-14 be waived, as done in States such as Uttar Pradesh, Maharashtra and Karnataka this year. The cost to the Tamil Nadu government of such a waiver would be Rs.65 crore.

The petition has also suggested a revision in the tariff for the power purchased from sugar mills. An increase of Rs. 2/kwh would make it a uniform rate that is equivalent to the tariff charged by TANGEDCO for the HT-1A category. 

  • Suggest subsidy to be given to farmer directly

  • Want purchase tax and cane cess waived