As a prelude to the implementation of a pricing policy based on a revenue sharing formula (RSP) for over one lakh cane farmers in Tamil Nadu, the State government has begun paying out a transitional production incentive of ₹200 per tonne.
The government is aiming to ensure that coverage is extended to all farmers by December, regardless of the type of sugar mill — cooperative, public or private – to which they sell sugarcane.
The system of State Advised Price (SAP) had been in place until the previous sugar season (October 2016 - September 2017). While sugar mills had complained that the SAP was unrealistic, the grievance of cane farmers was that the mills had huge arrears. Besides, the sugar industry has been going through a phase of “negative growth”. This was why the State government, early this year, decided to migrate to the RSP-based pricing policy which, it concluded, would ensure better remuneration for farmers and enable the industry to overcome this difficult phase, officials in the State Agriculture and Sugar Departments said.
Under the proposed scheme, the Central government will continue to fix the fair and remunerative price (FRP). The State government will determine the RSP-based price, considering either 70% of the ex-factory basic value of sugar and primary by-products such as bagasse or 75% of the value of sugar. The higher value among the two will be considered as the RSP-based sugarcane price.
Apart from paying FRP, the mills will have to pay the difference in the event of the RSP-based price being higher than the FRP.
Even though the Tamil Nadu Sugarcane (Regulation of Purchase Price) Act came into force on October 1 to facilitate the implementation of the new scheme, rules are yet to be framed and the implementation mechanism is also not in place.
As the season came to an end on September 30, the government had proposed to pay the incentive for the period of transition, by meeting the gap between the FRP of ₹2,550/tonne for 2017-18 and the SAP of ₹2,750/tonne determined for 2016-17. “This is how the amount of ₹200 per tonne has been arrived at,” explained an official.
Apart from the incentive, farmers are now eligible to get the FRP of ₹2,550 per tonne. This excludes ₹100 per tonne towards transportation charges. An official in the Sugar Department claimed that 18 sugar mills in the cooperative and public sectors had paid FRP to all their farmers, numbering 55,000.
Palani G. Periyasamy, president of the South India Sugar Mills Association, said private mills had fulfilled their commitments. “The mills have arrears of maybe ₹100 crore to ₹125 crore for 2017-18,” he said.
As for the mode of payment of the incentive, the government will pay farmers through direct benefit transfer (DBT). “About 9,500 cane farmers attached to three mills in the cooperative and public sectors have been covered so far,” a Sugar Department official said.
