The Tamil Nadu Government has announced a State Advised Price of Rs 2,000 a tonne of sugarcane plus a transport cost of Rs 100 for the 2011-12 sugar season, according to an official press release.
The Government will also take steps to enable the production of ethanol by the distilleries connected to the sugar mills to support the ethanol-blended fuel programme. This will strengthen the revenue for the sugar mills which will be able to pay the farmers the higher price for cane, the release said.
There are six private sector sugar mills and two cooperative sector mills with the ability to produce ethanol. However, since 2006, the mills which had previously produced about 185 lakh litres of ethanol for the oil marketing companies, had not been permitted to supply ethanol by the then State Government.
The sugarcane acreage has increased in the State to 3.5 lakh ha in the current season against 3.1 lakh ha previously. Sugarcane output is expected to increase to 400 lakh tonnes (342.5 lakh tonnes).
The Government has hiked the sugarcane price by Rs 100 over last season's price when the SAP was Rs 1,900 a tonne linked to a sugar recovery of 9.5 per cent and the transport cost was Rs 100 taking the total to Rs 2,000 a tonne.
The South Indian Sugar Mills Association – Tamil Nadu, the industry body representing the sugar mills has welcomed the announcement by the State Government.
The association's president, Mr N. Ramanathan, said that the State Government has adopted a balanced approach and protected the interests of the farmers and taken into account the sugar mills' ability to pay under the current market situation.
Mr M Manickam, Vice Chairman and Managing Director, Sakthi Sugars, described the sugarcane pricing as a ‘pragmatic balance' between the needs of the farmers and the industry. The Government has sent out a positive message to the farmers through the hike in sugarcane price, the only crop where the minimum price is assured uniformly to the farmers across the State throughout the cropping duration. This will sustain farmers' interest in the crop in the coming seasons.
Mr Ram V. Tyagarajan, Chiarman and Managing Director Thiru Arooran Sugars, said the industry was particularly ‘delighted with the plan to revive the ethanol programme.'
With the growth in sugarcane production, there is a surplus of molasses and alcohol with the industry. The decision to permit ethanol production for the oil marketing companies is a ‘very, very welcome move' that will support the sugar mills.
According to industry figures, the oil marketing companies are now paying a provisional price of Rs 28 a litre of ethanol in the States where the ethanol-blended fuel programme is on. But the industry is confident that the ongoing proposal to revise the price will see this enhanced to Rs 33 a litre.