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Tamil Nadu's sugarcane price hike may stay on paper this year too

Private and state-owned sugar mills numbering 43 have not been able to adhere to the price bar the state government wants them to reach.

, ET Bureau|
Last Updated: Jan 20, 2016, 11.05 AM IST|Original: Jan 20, 2016, 11.02 AM IST
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Private and state-owned sugar mills numbering 43 have not been able to adhere to the price bar the state government wants them to reach, partly due to highly-leveraged balance sheets drying up liquidity and sugar prices being in a free fall.
Private and state-owned sugar mills numbering 43 have not been able to adhere to the price bar the state government wants them to reach, partly due to highly-leveraged balance sheets drying up liquidity and sugar prices being in a free fall.


CHENNAI: With not much encore, on the eve of the harvest festival Pongal this year the official Twitter handle of the ruling AIADMK celebrated a recent move by the government to hike cane prices, intended to protect lakhs of farmers in the fourth-large st sugar producing state.

The Tweet, with the hashtag #Mission234, comes as part of a sustained social media campaign to inform the electorate of the AIADMK government's schemes and initiatives. The farmers, however, have been doubtful.

"The price is encouraging. But, going by the trend over the past two years, we are doubtful whether we will get this money," said K Rajendran, Secretary of Consortium of Indian Farmers Associations from Ariyalur, a sugar-producing district in the state.

Rajendran had a discussion with the local sugar mill owner over pricing. "We were told the price would be around the Centre's advisory of Rs 2,300 a tonne; a higher price is possible only with the support of the state government."

For about two sugar seasons now, the state government's price for cane has been on paper.

Private and state-owned sugar mills numbering 43 have not been able to adhere to the price bar the state government wants them to reach, partly due to highly-leveraged balance sheets drying up liquidity and sugar prices being in a free fall.

In 2013-14, state sugar mills had requested the AIADMK government to bridge a Rs 300-crore shortfall in paying cane farmers.

In the next year, mills paid an amount somewhere between the centre's price and the state advised price at Rs 2,450 a tonne. This year, mills have ruled out additions o the Centre's price.

Farmers, over the past 15 months, have been periodically knocking on he doors of ministers for a price that will meet their expenditures.

On January 13, farmers had met the industries minister, P Thangamani, who had told them that the government has been working on getting the mills to pay the state-advised price.

Sugar plantations, located largely in districts such as Vilupuram and Cuddalore, can yield profits of about Rs 40,000 an acre if the crop, water and seed conditions prove favourable. Sugarcane's profitability was its main draw for farmers into other crops.

K Kothandaraman, a cane farmer from Vilupuram, says farmers have begun to wean themselves away from the crop to look at paddy, banana, turmeric and other crops owing to low realisations for cane over the last three years. Farm association presidents put the arrears for state farmers considering the SAP as benchmark at around Rs 800 crore.

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