The Tamil Nadu Government has struck a fine balance between the sugarcane farmers and the sugar mills in fixing the sugarcane price for the 2011-12 season, according to Dr Palani G. Periasamy, Chairman, PGP Group.
The proposal to kick off the ethanol production in distilleries linked to sugar mills will give a major push to the revenue flows for the mills and support timely sugarcane payments. The decision will help rejuvenate the dead investments running to a few hundred crore rupees made by the sugar mills, he said.
Welcoming the State Government’s announcement of a price of Rs 2,000 a tonne for sugarcane plus Rs 100 transport cost to be paid to the farmers Dr Periasamy, the former President of the South Indian Sugar Mills Association, said the hike of Rs 100 a tonne over the price announced last year takes into account the interests of the farmers and the industry given the present market conditions.
With estimates of high sugar production in the domestic and international markets, sugar revenues alone cannot support the sugarcane price and margins of the mills will be eroded. The sugar mills will be dependent on revenues from by products such as alcohol, ethanol and power from cogeneration.
The decision of the Tamil Nadu Government to participate in the ethanol programme is a welcome move, he said. Since 2006 when the then State Government had suspended the ethanol programme, the investments by the sugar mills have been lying dormant. But now a new revenue source has been opened up, he said.