AP sugar mills seek govt protection

Express inability to offer higher cane price.

Sugar mills in Andhra Pradesh have expressed their inability to hike cane prices, as suggested by the government, for the current season citing their financial position. Besides, they said the existing price was among the highest in the country.

State major industries and sugar minister J Geeta Reddy held a meeting with sugar mills on Wednesday to specifically tell them that cane farmers should get a higher price compared with the previous season as the acreage was fast dwindling in the state with more and more farmers shifting to other remunerative commercial crops.

Farmers last year got an average price of Rs 1,996 per tonne from sugar mills as compared with Rs 1,800 in Maharashtra, Rs 1,980 in Karnataka, Rs 1,900 in Tamil Nadu and Rs 1,950 in Punjab. Only Uttar Pradesh and Haryana exceeded AP by paying Rs 2,050, according to the mills.

“We are not asking you to hike the price to a particular level. The government only expect you to pay higher than the previous price,” the minister told the mill owners. On their part, the management of sugar mills requested the minister to address their problems first so that they get could come out of the losses.

They sought imposition of cess and import fee on sugar, rectified spirit (RS) and extra neutral alcohol (ENA) coming into the state to protect the local industry, which according to them, is already under stress from higher production costs and lower realisation.

The mills also sought removal of export fee of Rs 2,500 per tonne on molasses, the highest compared with other states, among other measures to sustain their operations. The industry representatives under the banner of South Indian Sugar Mills Association made these requests at the meeting.

Slips to sixth position
There are about 36 sugar mills with an installed capacity of 15.6 million tonnes in the state. Of these, 25 are in the private sector, three joint ventures and eight cooperatives sector units. The state has slipped one step to sixth position in the country in terms of cane crushing, which stood at 103.14 million tonnes in 2010-11.

According to the association, the mills are incurring a cost of Rs 2,950 per quintal towards production of sugar while the average ex-factory sale of sugar is at Rs 2,600 per quintal, thus making it difficult to sustain the operations.

Adding to the mismatch in cost of production and price realisation, the companies are also subjected to pay 5 per cent value-added tax unlike in other states. Large-scale dumping by neighbouring states is further affecting the business of local sugar mills, they said. The average cane price offered to farmers in the state is Rs 1,996 per tonne.

Apart from asking for a imposition of cess of Rs 200 per quintal of sugar under the AP Rural Development Cess Act on imports, an import fee of Rs 5 per litre on RS and ENA, they also requested the government to allow export of RS and ENA without duty.

Citing severe labour shortage, the mills asked the state government to request the Centre to make sugar harvesting an eligible activity under the national rural employment guarantee programme.