Sugar mills in Karnataka, which are facing a shortage of sugarcane for the new crushing season starting October 2008, have started wooing cane growers by offering higher cane prices.
The availability of sugarcane in the state is estimated at 24.6 million tonnes for sugar year 2008-09 (October 2008-September 2009), which is 20 per cent less than 2007-08.
In an effort to ensure adequate supply of cane to their factories, several companies in the southern part of Karnataka have come forward to hike the price being paid to cane growers upto 1,100 per tonne, a rise of around 35 per cent over the statutory minimum price (SMP) fixed by the Centre.
Some of the mills that have announced a cane price of Rs 1,100 per quintal include Pandavapura Sugar Factory, Bannari Amman, SCM, Coromandel among others, sugar industry sources said.
“Some of the sugar mills in southern Karnataka have already commenced crushing of cane for the new year one month ahead of the scheduled start. The mills resorting to the move shows that they want to ensure adequate supply of cane for their factories. The mills fear that if they delay announcing higher cane price, they may not get enough cane as farmers have shown an inclination for jaggery making,” the sources told Business Standard.
Meanwhile, the Karnataka chapter of South Indian Sugar Mills Association (SISMA) has convened a meeting of all its members on September 15 in Bangalore to arrive at a consensus on fixing the cane price for the year 2008-09.
“There are a number of factors that have driven the sugar mills to raise the cane price, such as the increase in the retail prices of sugar, rise in by-product prices, diversion of cane by farmers towards jaggery making and the actual shortage of cane. So, in order to ensure uniformity in cane prices being offered by the mills, the meeting has been convened next week,” the sources said.
A large number of farmers in Mandya district, which is the leading producer of sugarcane in south Karnataka, are diverting their crop to jaggery making.
They said the prices of molasses have gone up over five times to Rs 4,500 per tonne in 2008 compared to the previous year, while that of rectified spirit rose 45 per cent to Rs 32 per litre.
Ethanol is currently sold by some mills at Rs 21.5 per litre and the power generated by the mills is sold at prices of upto Rs 7 per unit. Presently, jaggery prices have been ruling at Rs 2,000-2,500 per quintal. Farmers can save upto Rs 1,700 per quintal by supplying cane to jaggery units, he said.
The South Indian Sugar Mills Association, at a meeting held with the state minister for sugar Shivaraj Thangadagi on September 6, has requested the government to prevent farmers from diverting the cane towards jaggery and also to the mills in neighbouring states.
There are 51 sugar mills active in the state, 19 of them have a combined installed capacity to produce 411 Mw power and only nine mills have the facility to produce ethanol.
Meanwhile, only two factories — Ugar Sugars and Shri Renuka — marketing ethanol.
