Sugar mills and cane farmers in Karnataka have worked out a revenue-sharing formula, which if adopted, would be the first of its kind in the country.
According to the formula, cane farmers will get 60 per cent of the revenue realised by the mills which is the net of taxes and duties. The average price realisation for sugar will be arrived at based on the sale price of sugar and profits from the sale of the by-products.
At a meeting convened by state sugar minister Shivaraj Thangadagi here on Tuesday evening, representatives of sugar mills, Cooperative Sugar Federation, South Indian Sugar Mills Association (SISMA) representative have agreed in-principal to the formula. However, cane farmers were unhappy with the revenue-sharing formula and the issue has been referred to chief minister B S Yeddyurappa who is expected to finalise the formula on April 20, 2010.
"At the beginning of the season, the millers will pay the first installment to growers based on the fair and remunerative price (FRP) fixed by the Centre. At the end of the crushing season, the final price, which is the net after taxes and duties, will be worked out based on the average sale price of sugar and profits generated from the sale of by-products like bagasse and molasses. About 60 per cent of the final price will be shared with farmers," R Ramakrishnan, vice president, South Indian Sugar Mills Association and managing director of GMR Industries told Business Standard.
He said, this is the first time in the country wherein sugarcane farmers will get a majority of the profit realised from the sale of sugar. The formula was worked out after studying the models in
Australia, Indonesia and Thailand. "I think this is probably the best model. We cannot work out a 100 per cent mutually-agreeable formula for all,” he said.
At the end of every sugar year, a committee will be constituted to work out the final cane price for farmers based on the average realisation, he added.
Kurubur Shanthkumar, president, Karnataka Sugar Growers’ Association said, “We are not fully happy with the formula. We are asking for 70 per cent of the sugar revenues and profit from the sale of by-products plus the cost of cutting and harvesting.
The millers should calculate the final price based on the profits they earn from other value-added products like cogen power, ethanol and rectified spirit.”
While mill owners have agreed to include 4 per cent of the molasses and bagasse, and arrive at the price to be paid to farmers.
For sugar year 2009-10, sugar mills in north Karnataka have paid a first installment of Rs 2,400 per tonne of cane and Rs 1,950 in south Karnataka, which is 85 per cent and 50 per cent more than the FRP respectively. As per the new formula, the price for the present sugar year will be calculated from October to March, Ramakrishnan added.
