 "Mills suspend cane crushing in Karnataka over payment of arrears")
Mills, which are not in a position to pay cane arrears amounting to Rs 1,803 crore for 2013-14, have sought an urgent intervention from the state government and bail them out.
Out of 60 working mills, 39 have stopped crushing. Majority of them are in northern parts of the state. A few of them, which had commenced early crushing, have also suspended crushing in the last fortnight. Only eight factories in the cooperative sector and 13 factories in southern parts of the state are currently crushing.
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"We are not against payment of rightful price to farmers. But, we are unable to pay as our sales realisation was very low. We do not have money to pay them. So, we have asked the state government to come to our rescue and bail us out of the current crisis," Pawan Kumar, President, South Indian Sugar Mills Association (SISMA), Karnataka said.
On November 6, 2014, the Karnataka High Court upheld the Karnataka Sugarcane (Purchase and Supply Control) Act, 2013, which enables the state government to fix sugarcane prices over and above the fair and remunerative prices (FRP) fixed by the Central government. For the year 2013-14, Karnataka government had fixed Rs 2,500 per tonne cane price, 19 per cent more than the FRP.
Subsequent to the Court order, the Karnataka government has issued notices to 56 sugar mills asking them to pay arrears as per the rules. Mills in north Karnataka had paid FRP price, while mills in southern parts paid up to Rs 2,400 per tonne. Only four factories had paid Rs 2,500 per tonne during the year.
He said the situation of mills is worse this year due to low realisation. The cost of production is around Rs 32 per kilogram as against the realisation of Rs 27 per kg.
"In such a situation, it is very difficult to pay arrears to farmers. Mills are unable to pay even FRP of Rs 2,200 per tonne for the current season (2014-15). We want the state government to intervene in the matter and bail us out immediately," Kumar said.
Despite taking close to Rs 1,000 crore soft loans from the Centre to pay for the cane arrears, mills are unable to manage the situation, he said.
For 2013-14, Karnataka produced 4.18 million tonnes of sugar compared to 3.39 million tonnes in the previous year, showing a growth of 23.3 per cent. The recovery of sugar went up 58 basis points to 10.98 per cent. Cane crushing went up 16.6 per cent to 38.1 million tonnes during the year compared to 32.7 million tonnes in 2012-13 season.
About 60 mills were operational with a combined capacity of 273,950 TCD (tonnes crushed per day) during this year as against 57 last year.
Karnataka minister for cooperation and sugar H S Mahadeva Prasad has assured the industry to hold a meeting with chief minister Siddaramaiah next week to work out a solution, Kumar added.