 "Tuticorin salt industry done in by high costs")
The Rs 300-crore salt industry in Tuticorin, the second largest in the country after Gujarat, faces a meltdown owing to increases in power and labour costs, and the district administration's recent decision to take back a portion of government-owned land that has for decades been used for salt farming.
Representatives from this industry, which comprises thousands of small and medium farmers, said it would be a matter of a few years before it was washed away completely.
A R A S Dhanabalan, secretary, Tuticorin Small Scale Salt Manufacturers Association, said hundreds of units have already closed, since they are unable to operate owing to escalation in the cost of production, which was not compensated by the retail price of the product. It is estimated that around 1,500 tonnes of salt production has come to a halt due to cost pressures.
K Chakravarthy, whose company supplies salt to FMCG majors, said that the market scenario is not encouraging for salt manufacturers owing to rising costs of labour, power and iodine. Labour costs have increased by almost 36 per cent and power costs by three times, he noted. While total production costs have gone up by almost 20 per cent, prices of salt have come down by almost Rs 50 per tonne, he added.
Then there is competition from Gujarat, which is sending salt all the way to markets in Andhra Pradesh, including Hyderabad. The cost of raw salt produced in Tuticorin, he noted, is around Rs 800 per tonne, but in Gujarat it is about Rs 600. The difference is due to lower production cost, made possible by the Gujarat government's incentive schemes for small and medium enterprises.
While this was the case in the domestic market, exports have also come down drastically owing to quality factors. "Salt quality is affected mainly because of pollution. Too many power plants have come up in recent years and they are all close to the salt ponds," said M P Deepak, director, Tuticorin Salt and Marine Chemicals Ltd. He alleged that emissions from these plants have polluted the salt ponds and created quality problems.
Indonesia, which was earlier the biggest importer of salt from Tuticorin, sourced only 45,000 tonnes in the first six months of 2012-13 (more updated figures are not available, this being an unorganised industry), compared with 82,175 tonnes in the corresponding period of 2011-12. Indonesia topped the list of importers of salt from Tuticorin in April-September 2012-13, followed by Bangladesh with 38,750 tonnes and Malaysia with 27,998 tonnes.
Deepak noted that quality plays a major role in exports. Industrial salt requires a high level of purity. Added to this, the district administration's recent decision to take back some of the government-owned land that was used by the salt cultivators has brought down production drastically, said Dhanabalan.
He said the district administration has sent a notice asking farmers to cease salt production in some 1,000 acres of land, and this will result in a drop in salt production by 80,000-100,000 tonnes.
However, Ashish Kumar, the district collector of Tuticorin, justified the decision, saying that the state government has been supporting the salt industry. "It's a misunderstanding that we are taking away their lands. That land belongs to the government and the port," he said.
The state government has announced a ship-building project, which by its very nature has to be located near a port, and for which land is needed. The land, to the extent of 1,500 acres, has for many decades been used for salt production and the government had not objected all these years.
Representatives from this industry, which comprises thousands of small and medium farmers, said it would be a matter of a few years before it was washed away completely.
A R A S Dhanabalan, secretary, Tuticorin Small Scale Salt Manufacturers Association, said hundreds of units have already closed, since they are unable to operate owing to escalation in the cost of production, which was not compensated by the retail price of the product. It is estimated that around 1,500 tonnes of salt production has come to a halt due to cost pressures.
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"On one side the production cost has been going up, and on the other side the price of the product has fallen drastically. This industry will not survive for long. In fact, the next generation has already started moving to other industries," said Dhanabalan.
K Chakravarthy, whose company supplies salt to FMCG majors, said that the market scenario is not encouraging for salt manufacturers owing to rising costs of labour, power and iodine. Labour costs have increased by almost 36 per cent and power costs by three times, he noted. While total production costs have gone up by almost 20 per cent, prices of salt have come down by almost Rs 50 per tonne, he added.
Then there is competition from Gujarat, which is sending salt all the way to markets in Andhra Pradesh, including Hyderabad. The cost of raw salt produced in Tuticorin, he noted, is around Rs 800 per tonne, but in Gujarat it is about Rs 600. The difference is due to lower production cost, made possible by the Gujarat government's incentive schemes for small and medium enterprises.
While this was the case in the domestic market, exports have also come down drastically owing to quality factors. "Salt quality is affected mainly because of pollution. Too many power plants have come up in recent years and they are all close to the salt ponds," said M P Deepak, director, Tuticorin Salt and Marine Chemicals Ltd. He alleged that emissions from these plants have polluted the salt ponds and created quality problems.
Indonesia, which was earlier the biggest importer of salt from Tuticorin, sourced only 45,000 tonnes in the first six months of 2012-13 (more updated figures are not available, this being an unorganised industry), compared with 82,175 tonnes in the corresponding period of 2011-12. Indonesia topped the list of importers of salt from Tuticorin in April-September 2012-13, followed by Bangladesh with 38,750 tonnes and Malaysia with 27,998 tonnes.
Deepak noted that quality plays a major role in exports. Industrial salt requires a high level of purity. Added to this, the district administration's recent decision to take back some of the government-owned land that was used by the salt cultivators has brought down production drastically, said Dhanabalan.
He said the district administration has sent a notice asking farmers to cease salt production in some 1,000 acres of land, and this will result in a drop in salt production by 80,000-100,000 tonnes.
However, Ashish Kumar, the district collector of Tuticorin, justified the decision, saying that the state government has been supporting the salt industry. "It's a misunderstanding that we are taking away their lands. That land belongs to the government and the port," he said.
The state government has announced a ship-building project, which by its very nature has to be located near a port, and for which land is needed. The land, to the extent of 1,500 acres, has for many decades been used for salt production and the government had not objected all these years.