Southern States - Tamil Nadu   

State advised price for sugarcane no more

By S.Vydhianathan

CHENNAI April 27. The State Government has decided to stop the decades-old practice of announcing State advised price for procuring sugarcane in addition to the statutory minimum price of the Centre.

This was made clear in a policy note of the Agriculture department tabled in the Assembly on Thursday. The Government move to discontinue the SAP follows its decision to privatise all 19 cooperative and public sector mills in the State.

The State has been directing sugar mills to pay a price higher than the SMP, as farmers complained of uneconomic cost and wanted remunerative price.

Till 1997-98 all the mills, including those in private sector, used to pay the SAP and procured cane from farmers. But since 1998-99, the private sector mills, numbering about 16, are not paying the SAP, as they have obtained a High Court stay restraining the Government from announcing additional price for sugarcane. Some of the mills are even paying less than the Centre's SMP for "they would be in no position to pay the price fixed by the Government".

However, the cooperative and public sector mills continued to pay the SAP till 2000-01. Last year, the Government did not announce the SAP, though there was a persistent demand from the cane growers. Now it has declared that there will be no more State advised price and the cane growers have to be content with the SMP of Rs. 695 a tonne with 8.5 per cent recovery for the current year with a premium of Rs. 82 for every one per cent increase in recovery.

According to a retired commissioner of sugar mills, over the years, the SAP was fixed without taking into consideration the financial viability of the mills. For example, in 1999-2000, when the SMP was fixed at Rs. 561 and linked to 8.5 per cent recovery, the State announced an additional Rs. 181 a tonne. In 2000-2001, while the SMP was Rs. 595, the SAP was Rs. 755 per tonne.

To pay the cane growers, the cooperative and public sector mills sought the help of the Government, which used to sanction funds under `way and means advance' (loan). This gradually increased the burden of the mills, which were reeling under heavy financial stress owing to low price of sugar. While the sugarcane price increased by over 50 per cent in the past five years, the sugar price rose by just 12 per cent. There was a mismatch between the sugar and cane prices, which over the years ended in an accumulated loss of about Rs 1,000 crores, he said.

As the mills are unable to get out of the "debt trap", the Government decided to sell them.

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