Karnataka govt, sugar mills at loggerheads over cane arrears

In 2013-14, sugar mills recorded 16 per cent growth in cane crushing at 37.25 mt, with a recovery of 11.04 per cent. Sugar production rose 23 per cent to 4.11 mt

There seems no end to the tussle between the Karnataka government and sugar mills in the state. Now, mills have refused to pay the higher cane price fixed by the government.

Mills say it will be difficult for them to pay the price fixed by the Karnataka Sugarcane Control Board (KSCB), owing to low realisations in 2013-14. The mills, which have challenged KSCB’s formula, have urged the government to wait until the matter is resolved in the high court in the first week of June.

The mills have challenged the cane price of Rs 2,500 a quintal, 19 per cent more than the Union government’s Fair and Remunerative Price (FRP) of Rs 2,100 a quintal (for 9.5 per cent recovery).

Earlier this month, the state government had warned it would take legal action against mills for non-payment of dues to farmers.

T B Jayachandra, law minister, Karnataka, said the cane arrears of Rs 3,357 crore. The minister had threatened to invoke the Karnataka Sugarcane (Regulation of Purchase and Supply) Act, 2013, to file cases against factory owners. Pawan Kumar, president of the South Indian Sugar Mills Association (Sisma), said, “We are not against the revenue-sharing formula recommended by the C Rangarajan committee. As a first instalment, we have paid the FRP and, depending on the court’s verdict, we will abide by the order…The government has taken into account last year’s revenue. It should take into account current market prices for sugar and the revenue at the end of the sugar season. We have contested this matter in court.”

All sugar mills had unanimously said they would pay the FRP, and were doing so, he said, adding as of now, no other payment could be made.

Meanwhile, mills in the state are awaiting the release of funds from the Centre, as part of a relief package announced by the government in December 2013. Under the package, the mills will get about Rs 1,000 crore. For 2013-14, sugar mills recorded 16 per cent growth in cane crushing at 37.25 million tonnes (mt), with a recovery of 11.04 per cent. Sugar production rose 23 per cent to 4.11 mt. The combined capacity of the about 60 mills was 273,950 tonnes a day.