 "State advised price of Rs 2,850 a tonne for sugarcane unviable: TN sugar mills")
The South Indian Sugar Mills Association (SISMA) has said that paying any higher price over the fair and remunerative price (FRP) will be beyond the means of sugar mills leave alone the advisory price announced by state government.
Tamil Nadu Chief Minister J Jayalalithaa, on Monday, announced Rs 2,850 per tonne as the state advised price (SAP) for sugarcane for 2015-16. This is higher by Rs 550 per tonne as compared to the fair and remunerative price (FRP) fixed by the central government for the year, she said.
Responding to which, SISMA said that at current sugar prices, paying FRP of Rs 2,300 per tonne itself is a challenge. The government has announced a direct subsidy of Rs 45 per tonne of cane subject to mills fulfilling their sugar export and ethanol supply obligations.
"...paying any higher price over FRP will be beyond the means of sugar mills leave alone the advisory price announced by Government of Tamil Nadu," said the Association.
It was further stated VAT on sugar sales, restrictions on ethanol production and supply, unremunerative tariff for power exports and steep fall in sugar prices have taken a toll on the financial health of sugar mills and many of them have gone for debt restructuring programme and losses accumulated over the past two seasons have led to a liquidity crunch.
The association has submitted several suggestions to the state government to improve the ability of sugar mills to pay cane price that include — removal of VAT on sugar sales, increasing the ethanol production and paying remunerative tariff for power exports by sugar mills.
"It is very unfortunate none of the suggestions have been favourable considered by the Government of Tamil Nadu," said the association in a statement.
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SISMA has asked the state to remove VAT on sugar sales and the cap on ethanol production and revise power tariff to a remunerative level so that mills will have the ability to pay FRP.
It also requested the state government to consider a direct subsidy to farmers to bridge the gap between the SAP and ability of the sugar mills of the sugar mills to pay the same.
The association said that the introduction of VAT on sugar sales has made sugar produced in Tamil Nadu uncompetitive vis-a-vis the sugar produced in neighbouring states.
Tariff for power exports have not been revised since 2010 and the tariff currently paid is equivalent to half of what is paid by states like Maharashtra, Uttar Pradesh and Punjab.
“With a cap on ethanol production, farmers in Tamil Nadu will not be able to get the direct subsidy announced by Government of India.”