Boom time for state sugarcane growers

Mills offer prices 40 per cent over SMP.

Sugarcane growers in Karnataka are in for rich bonanza this year as sugar mills are competing with each other to offer them higher prices for the cane.

A few sugar mills in southern part of the state, which have commenced crushing for the sugar year 2009-10, have announced an unprecedented rise in cane prices between Rs 1,440-1,500 per tonne, close to 40 per cent higher than the Rs 1,077 per tonne statutory minimum price (SMP) announced by the Centre recently. Last year, the highest price paid was Rs 1,300 per tonne.

According to sugar industry sources, already eight sugar mills in southern Karnataka have commenced crushing, nearly a month ahead of the usual commencement of the season for the sugar year (October 2009-September 2010).

For the first time in the history of sugar industry in Karnataka, these mills have fixed higher price for the cane. Some of the mills that have announced higher cane price include Sri Chamundeshwari Sugars Ltd, Bannari Amman Sugars, NSL Sugars Ltd and the state-owned Mysore Sugar Company Ltd.

The move to fix cane prices much higher than SMP follows the drop in sugarcane output in the state last year. The availability of cane for the mills for 2008-09 dropped by 40 per cent to 16 million tonnes compared to the previous year. The continuation of the same level of cane for the next season prompted the sugar mills to announce higher prices, the sources said.

The South Indian Sugar Mills Association (SISMA) has estimated 16.5-17.5 million tonnes of cane for the year 2009-10. In addition to higher cane price, the mills in southern Karnataka have also announced Rs 75 per tonne transportation charges to farmers bringing cane about 15 kms from the factory.

The industry sources say that this is for the first time that mills in southern Karnataka have announced transportation charges to farmers. Apart from this, mills are also thinking of bearing the cost of harvesting. However, no mill has announced harvesting cost yet.

In northern Karnataka it is already an existing practice that mills pay around Rs 250-300 per tonne as harvesting and transportation charge in addition to the cane price. However, mills in northern Karnataka are yet to start crushing, so cane price is still to be announced the next year.

Meanwhile, sugar mills have failed to arrive at a consensus on deferring cane crushing for next year to November 1, 2009. At a meeting convened by the Commissioner for Cane Development, government of Karnataka, last week regarding start of sugar factories in north Karnataka from November 1, 2009, a few mills declined to stick to a November 1 deadline. They argued that matured cane was available in their area.

SISMA officials had urged the state government to issue a direction to all the sugar mills to defer cane crushing as the crushing of immature cane will result into low sugar recovery.