A large number of sugar mills in Karnataka have either delayed or suspended cane crushing for the current season saying they are unable to pay farmers as the sales realisation is very low, according to South Indian Sugar Mills Association (SISMA).
The development comes in the wake of Karnataka High Court verdict upholding state government's powers to fix sugarcane prices.
"We are for paying the price to farmers. But, we are unable to do it as our sales realisation was very low. We do not have money to pay them," SISMA President Pawan Kumar told PTI here.
Thirty-nine working mills, majority of them in northern parts of the state, of the 60 operational have stopped crushing, Kumar said. A few others also have stopped crushing after commencing it early in the last two weeks.
"Only eight factories in the cooperative sector and 13 factories in southern parts of the state are currently crushing," Kumar said.
In this scenario, SISMA has asked the state government to intervene and bail them out of the present crisis, he said.
Following the High Court order, the government issued notices to 56 sugar mills asking them to pay arrears as per the rules - only four of them have paid Rs 2,500 per tonne during the year and the mills in southern parts have paid up to Rs 2,400 per tonne, Kumar said.
Mills in North Karnataka have paid FRP price to farmers, he added.
The court, on November 6, upheld the Karnataka Sugarcane (Purchase and Supply Control) Act, 2013, which enabled the government to fix Rs 2,500 per tonne cane price, 19 per cent more than the FRP for 2013-14, Kumar said.
Explaining the sales realisation quotient, he said the cost of production is around Rs 32 per kilogram as against the realisation of Rs 27 per kg, which is worrying mill owners.
"In this scenario, it is hard to pay arrears to farmers. Mills are unable to pay even FRP of Rs 2,200 per tonne for the current season (2014-15). We want the government to intervene in the matter and bail us out immediately," Kumar added.
Mills across the state have to pay cane arrears amounting to around Rs 1,800 crore for 2013-14 and further they are not able to manage the situation even after availing Rs 1,000 crore soft loans from the central government, Kumar said.
Karnataka Sugar Minister H S Mahadeva Prasad has assured the industry to hold a meeting with Chief Minister Siddaramaiah soon to find a solution, Kumar said.
