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Earlier this week, the state government had warned the sugar mills that it would take over control of the mills if they fail to resume crushing by November 30.
"We had a meeting with chief minister at Kalaburagi yesterday and requested for more time to pay arrears to farmers for the year 2013-14. He has agreed to give us additional time to make the payment in two installments. Mills will pay the first installment of Rs 200/tonne in the next few days. The government has agreed to give us a moratorium of two years for the payment of second installment of another Rs 200/tonne," Pawan Kumar, President, SISMA told Business Standard.
He said mills expressed their inability to pay the entire arrears amounting to Rs 1,803 crore immediately considering the fall in sugar prices. The realization has come down to Rs 2,250 per quintal in the open market, he said.
However, for the current sugar season, the government has directed mills to pay as per the fair and remunerative price (FRP) announced by the Central government. The FRP is fixed at Rs 2,200 per tonne for a recovery of 9.5% as first installment and after the close of crushing season, they have to calculate profits from the sale of sugar and by-products and share 70% of it with farmers as second installment.
Around 40 mills out of 60 operational had either suspended or deferred crushing for the current year after the Karnataka High Court in its order on November 6 directed mills to pay state advisory price of Rs 2,500 per tonne for 2013-14 season. A large number of mills had paid up to Rs 2,000 per tonne last year and kept arrears pending, which exceeded Rs 3,000 crore. Subsequently, some mills had made a part payment at the end of the last crushing season.
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With a solution worked out at Friday's meeting with the chief minister in Kalaburagi, mills decided to commence crushing. Already, EID Parry started operations on Friday evening. Many other mills are commencing operations today and a few others are reopening on Sunday, Kumar said.
Meanwhile, farmers in the districts of Belgaum, Vijayapura and Bagalkot had started supplying their cane to mills in Maharashtra for better prices. "As the standing crop had started wilting, it was inevitable for us to cut it and supply to mills in the neighbouring state," said Shrimanth Duddagi, a farmer in Vijayapura district.
Karnataka is the third largest producer of sugar in the country with annual share of 13%. For 2013-14, Karnataka produced 4.18 million tonne of sugar compared to 3.39 million tonne in the previous year, showing a growth of 23.3%. The recovery of sugar went up 58 basis points to 10.98%. Cane crushing went up 16.6% to 38.1 million tonne during the year compared to 32.7 million tonne 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.
