Sugar industry will face a hard time with higher cane prices – Vidya Murkumbi of Renuka Sugars


love dale belagavi

vidya-murkumbiSpeaking to press Vidya Murkumbi, Executive chairman of Renuka Sugars said Question is how farmer and industry both will survive in coming years inclusive of this year. She was trying to get the point to the unreasonable pricing and the losses incurred by the industry. She further said that the state government gets Rs 4,500 per ton of cane crushed (Alcohol produced 10 litres) by tax on Indian Made Foreign Liquor (IMFL). Of the same amount, government can pay Rs 500 per tonne, out of the price declared to be paid by factories (Rs 2,500 per tonne) as compensation to survive farming community which will give them a boost.

She further said, it is a very unfortunate death of a farmer whatever the reason may be. Now the issue is not whether Rs 2,500 ex-field declared by government is right or wrong. It is not an issue whether farmer’s demand of Rs 3,000 per MT is right or wrong. Question is how farmer and industry both will survive in coming years inclusive of this year.

In last 5 years after globalization and de-licensing, the scenario of sugar industry, economy of sugar cane growers, consumption in the country and competitiveness of sugar cost has changed

On one side cultivation cost of sugarcane is going up on the other hand conversion cost from cane to sugar is inflating this has brought lot of political impart on the state and central government and has given room to many ambitious politically desirous people to politicize issue of cane payment

While fixing SMP/FRP, GOI did not go rationally and made increases in rates ranging from 4% to 60% which has further confused the farming community.

Area has increased from 40 lakh ha in 09/10 to 52.3 lakh ha in 13/14 an increase of 30% while sugar production is increased by 34% for the same period.

In past cyclic nature of sugar production had a vast impact on sugar price and industry used to make up losses during the production deficit years.

It may be noted that from past 4 years sugar production is much above consumption and has ended the cyclicality of sugar production and at the same time continuous increase in cane prices pulling down the industry to sickness

Until 12/13 consumption was capped at 230 lakh tons making more downside pressure on sugar prices

In last 5 years cane price of sugarcane has become main issue of arguments between sugar Industry and sugarcane growers although it has flared up because of political ambitious of some people connected to this issue but by and large the issue has become very critical and crucial due to increase in cost of sugar cane cultivation for growers and increase in cost of processing and volatility in sugar price in Market.

The best way to answer this crisis is formula of revenue sharing which is also system adopted worldwide in all sugarcane producing countries with percentages varying from 62 to 65% sharing on sucrose basis.

Rangarajan Committee appointed by Hon’ble Prime Minister taking into consideration Indian conditions of sugarcane growers has suggested two options either 70% of the revenue of sugar and its by products that is bagasse/molasses and press mud or 75% on revenue of only sugar. It may be noted that this formula being calculated on revenue has very less or negligible area of disagreement or controversy between two parties as the cost of processing and administration which varies due to managerial skills is not a parameter and secondly the revenue is directly proportionate to recovery so industry and farmer both get benefit of good varieties of cane which encourages and incentives further in development of good variety of cane in cultivation.

To save farmer and industry both are solely dependent on each other, farmer leaders and industry have to sit together to prepare the roadmap as by what structure of cane price industry and farmer both will survive. If as per the structure the cane production is not possible farmer will have option to change the cropping pattern or adjust to the economized cultivation pattern. We should keep in mind that since we are producing more than consumption we have to be competitive in world market as exports will be inevitable. Even if imports are stopped which have already stopped in last 2 months, the excess sugar produced as to be sold in the competitive world market, if not exported and if sugar production continued to be surplus even to pay FRP government will have to compensate both the farmers and industry to crush the cane.

It is wrong propaganda that Shree Renuka sugars has imported 15 lakh tons and sold in the Indian market. I am giving SRSL official figures import export in last two years.

 

If government tries to impose arbitrary and uneconomical cane price as declared on the industry which is already burdened of last year losses, the farmers and industry both will end up in an irreparable losses resulting in the factories closing the crushing and farmers cane left in the field.

Last year considering drought situation and misguided by rates prevailing and rising trend os sugar prices we paid Rs 300 more per ton and due to fall in sugar rate we suffered loss. We have not asked government to compensate this. This year government should compensate above FRP cane price and save farmer.


Trinity Belagavi
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1 COMMENT

  1. That’s balanced quotient of dialog from the table of Vidya Murkumbi, looking forward for intelligent announcement from the table of CM.

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