Private sector sugar mills in Tamil Nadu will not start operations in the current season without subsidy from the government to pay sugarcane farmers and abolition of VAT levied on sugar, according to Palani G Periasamy, President, South Indian Sugar Mills Association - Tamil Nadu.
The state government announced a sugarcane price of Rs 2,650 a tonne for 2014-15 (October -September) season which is unviable given the low price of sugar which is ruling around Rs 2,600 a quintal.
At a press conference in which managing directors and chief executives from sugar companies participated, he said even last year when the price of cane had been set at Rs 2,650 a tonne private sector mills had lost over Rs 550-700 on every tonne of cane crushed due to high sugarcane price set by the government. Sugar price had ruled around Rs 2,800 a quintal in the last season when the mills crushed about 118 lakh tonnes of cane. Mills had paid farmers about Rs 2,350 a tonne including the statutory price of Rs 2,100 a tonne set by the Centre. The industry had categorically said that the government will have to pay the balance.
The situation is worse this year with sugar prices down by Rs 250-300.
Rajshree Pathy, Chairman and Managing Director, Rajshree Sugars, said "it is not viable to start the factories especially with last year's sugarcane price issue unresolved."
Periasamy said the government has to abolish VAT levied on sugar and subsidise sugarcane payment. The private sector mills will pay just the statutory price set by the Centre which is Rs 2,200 a tonne for the current season and the balance will have to be paid by the state. The power tariff for cogeneration electricity supplied by the mills to TNEB will have to be revised on par with that paid by other State utilities. Tamil Nadu pays just over Rs 3 a unit against a tariff of around Rs 6 paid by most other States.
Over 25 Tamil Nadu private sector mills crush three fourths of the cane in the State.