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Chodavaram cooperative sugar factory has taken Rs 30 crore in advances from banks to clear the money it owes to farmers.
In practice, every year, the factory relies on the sale of sugar stocks to partly remit farmers' dues. However, this season lack of interest from traders, coupled with the availability of imported sugar at low prices, has hit its prospects.
For the cane crushing season that ended recently, it received around 470,000 tonne cane from farmers. Under the supply agreement, it is mandatory to clear the amounts within 15 days from the day of supply. The mill has announced a purchasing price of Rs 2,000 per tonne cane.
The management had decided to clear dues by offloading existing sugar stocks, but it found no takers. "We may even need another Rs 5 crore to clear the dues, which arose due to the board's decision to offer an incentive of Rs 100 per tonne to the farmers," said M Surya Bhagavanulu, managing director, Chodavaram sugar factory.
The management has been calling auctions every week, for the last 45 days, to offload 240,000 quintals of sugar. In May, it had disposed of some stocks at Rs 2,800-2,900 per quintal. It also hoped for good prices due to the Centre's decision on de-control measures. "In contradiction, traders were still quoting old rates only," he said.
The management says for achieving breakeven, prices need to stay above Rs 3,070 per quintal. "Local traders were hesitating to buy our stocks, so we may wait for a few more weeks for arriving at a better price," he said.
