Andhra mills seek entry tax on sugar

Sugar mills in Andhra Pradesh have requested the state government to impose an entry tax on sugar at the rate of least Rs 300 per quintal to check the low-priced sugar coming in from adjacent states, among steps to control the fall in sugar prices.

A further fall is expected in sugar prices owing to higher sugar production, in addition to huge opening stocks during the current season.

The appeal for help has come at a time when Opposition parties in the state have started demanding a minimum support price of as much as Rs 1,500 per tonne for cane while the industry has been maintaining that the sugar prices are already ruling below the cane prices paid especially in Telangana and Rayalaseema regions.

The ex-factory sugar prices are expected to fall further by Rs 50-75 per quintal on account of surplus sugar availability and may rule in the range of Rs 1,175 to Rs 1,200 per quintal, according to the state chapter of the South Indian Sugar Mills Association.

Andhra Pradesh chief minister YS Rajasekhara Reddy is expected to hold a meeting with senior government officials on Tuesday to take stock of the situation besides studying the demands coming from both the industry and cane farmers.

The state government wants to ensure last year's cane prices to the farmers even in the face of present adversity, a senior government official told Business Standard on Monday.

Interestingly, the state sugar industry body has also requested the government to announce a subsidy of Rs 250 per tonne to cane growers over and above the notified price of close to Rs 800 per tonne.

This is suggested to avoid unrest among the farmers as they had been given higher prices for their produce last year.

According to N Nageshwara Rao, president of the state unit of the South Indian Sugar Mills Association, the cost of production of sugar is working out at Rs 1,200 per quintal, including the current cane price, which is almost equivalent to the sugar price in the market.

The association is also demanding a couple of long-term measures such as removing the 55 per cent PLF (plant load factor) limit to push cogeneration, and clearing the long pending applications seeking ethanol manufacturing by the sugar mills.