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Sweet news for TN sugar mills

After the dismal performance of last year, sugar mills hope to have profitable operations in the current year. Such outcome is the result of much better price of sugar, presently ruling around Rs 45 a kg against less than Rs 30 last year. 

Five years ago Tamil Nadu produced 25.5 lakh tonnes of sugar. It declined steeply in the subsequent years. Production in the current season is expected to be around 11 lakh tonnes. But with severe drought affecting all districts of the state, production is projected to fall to just 9 lakh tonnes in the next season, said N Ramanathan, Managing Director, Ponni Sugars. 

Widespread drought will also affect production in Maharashtra that has been the largest producer of sugar. However, there is the hope of relief coming from UP. Ramanathan pointed to a new variety of cane developed by the Sugarcane Research Institute, Coimbatore, helping UP cane growers to increase sugarcane yields substantially – from an average of 22 tonnes per acre to 32 tonnes per acre; there is the additional prospect of higher recovery from 9.5 per cent to 10.7 per cent. These quantum jumps are expected to sustain over the next decade and more and augur well for maintaining high production of sugarcane and sugar in the years ahead. In the current season, UP is expected to produce 85 lakh tonnes and Maharashtra just around half at 42 lakh tonnes. ISMA estimates total production for the year at 213 lakh tonnes.

Sugar industry continues to suffer from political interference and hefty lobbying by TN farmers. States continue to recommend prices for  cane much higher than the price prescribed by the Commission for Agriculture Costs and Prices (CACP). Mill owners point to the uneconomic nature of such pricing that has resulted in mounting arrears on cane purchased. Sugar mills continue to pay on CACP prices resisting the increased price advised by the states. This resistance has resulted in mounting arrears estimated around Rs 21,000 crore at the all India level; UP alone is expected to account for Rs 14,000 crore of this. Due to the low prices of sugar last year, Tamil Nadu sugar mills suffered a loss amounting to Rs 1000 crore as also dues to cane farmers of Rs 1200 crore, said Ramanathan.

One notices wild claims of cane farmers and political leaders eager to ensure support from this vote bank. The latter have been suggesting a minimum cane price of Rs 5000 per tonne. Farmer leader Ayyakannu heading the bizarre agitation in Delhi for a month, graciously suggested: “if we are paid Rs 8000 per tonne of sugarcane we won’t look for subsidies, reliefs and other support by the government.”

At this price, as per Dr. Rangarajan committee formula, the retail price of sugar in Tamil Nadu will be around Rs 125 per kg, more than thrice the present level! Cane farmers number a mere half of one per cent of the state’s population of around 725 lakh. Still, political leaders, a good number of them land owners, lend their blind support to the farm lobby. In the licence-permit-quota raj, chief ministers used their prerogative and power to issue a licence for sugar mill to the chosen few. Remember MGR handing these to G Varadaraj and P G Periasamy, purely in appreciation of his friendship with these?

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