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Sugarcane farmers, mills spar over pricing

Source : BUSINESS_STANDARD
Last Updated: Sun, Sep 09, 2012 20:24 hrs

Sugarcane farmers and mills are at loggerheads in Karnataka over the fixation of cane prices for the sugar year 2012-13 (October-September). While the farmers have demanded Rs 3,000 per tonne ex-field as first advance for the year, a rise of 33 per cent in north Karnataka and 50 per cent in south Karnataka over last year, the mills are yet to announce their price. Instead, they have proposed revenue sharing formula for the first time in the country.

The issue of cane price for the coming year has been pending for many days as both farmers and mills do not agree to each other’s demands.

“It is not feasible to pay Rs 3,000 per tonne as the average recovery is not too high across the state and the prices have also dropped recently. The farmers are asking for such a high price based on the current prices of sugar. If the prices go down later in the year, it would be unviable for mills. We are open for revenue sharing with the farmers as it is practiced in many other countries. Even Rangarajan Committee is likely to recommend it,” Niraj Shirgaonkar, President, South Indian Sugar Mills Association (SISMA), said.

At a meeting held on August 31, 2012, which was chaired by chief minister Jagadish Shettar, the mills proposed the idea of revenue sharing. “We are not ready to accept the revenue sharing formula because the mills have not been transparent in disclosing their earnings to the farmers. We want to know what is the yardstick for revenue sharing. Let the Rangarajan Committee submit its report and we will decide on it after discussing the pros and cons of it,” Kurubur Shanthkumar, president, Karnataka Sugarcane Farmers’ Association, said.

Under the revenue-sharing formula, the farmers would get a share in the profits of the mills, which earn by way of selling sugar, molasses and cogen power. With area under sugarcane dropping due to drought and subsequent dip in the cane output by about 32 per cent to 225 million tonnes for the present year as against 330 million tonnes last year, the sugar prices are likely to go up further, Shantkumar said “If the prices go up further, then the mills should pay us even more,” he said. For 2011-12, the mills in north Karnataka have paid Rs 2,250 per tonne including harvest and transportation charges, while in the south farmers got Rs 2,000 per tonne. Some of the mills in southern parts of the state like Mysore, Mandya, Chamarajanagar and Hassan have already started cane crushing for sugar year 2012-13. They have announced Rs 2,000 per tonne as first advance.

“We have started crushing with Rs 2,000 per tonne as an advance price as we cannot keep farmers waiting until the revenue sharing formula is accepted. However, we have proposed to implement the revenue-sharing starting with this year. If it is accepted, then we will pay additional amount to farmers based on the total revenues end of the year,” Pawan Kumar, vice president, Coromandel Sugar, said.

Disagreeing with the farmers’ leaders for a cane price of Rs 3,000 per tonne, he said it would not be possible to pay so much at the present market prices of sugar. Sugar prices have declined by 11 per cent to Rs 3,200 per quintal compared to Rs 3,600 per quintal in July. Meanwhile, the chief minister announced he would soon constitute a high level committee to study the possibility of fixing cane prices every year based on the cost of cultivation, cost of conversion of cane, by products like molasses and cogeneration power among others.




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