Karnataka: 50 private sugar mills decide to hand over keys of their mills to government to run them
Bengaluru: Upset over the state government's decision to seize sugar stocks for non-payment of Rs 200 per tonne as incentive for sugarcane supplied by farmers, all 50 private sugar mills have decided to hand over the keys of their factories to the government to run them from the next season.
"We have conveyed this decision to Chief Minister Siddaramaiah, the government will be responsible for the consequences", said Mr Jagadish Gudaganti, chairman and managing director of Sri Prabhulingeshwara Sugar Mills. Terming the government decision to issue recovery certificates and seize the stock of sugar lying in godowns of sugar mills as 'regressive', Mr Gudaganti said such treatment had been meted out to sugar mills for the first time in the century.
In the past, one or two factories had been seized by governments for mismanagement and not for this reason. Since it was a question of life and death, the managements of private mills have decided to close down their factories and hand over the keys to the government. "We cannot run the factories under such pressure. Let the government take over our factories. We will stop crushing of sugarcane from the next season and the government will be responsible for the consequences", he warned.
Mr Gudagunti, a past president of South India South Mills Association, Karnataka Branch, said there was glut in sugar production throughout the country this year because of which the prices of sugar had dropped to Rs 19 per kg. When the government fixed Fair and Remunerative Price (FRP) of Rs 2,100 per tonne during 2013-14, the sugar price was around Rs 32 per kg. This year, of the total 285 lakh tonnes of sugar, the share of Karnataka, which is the third biggest producer of sugar after Maharashtra and Uttar Pradesh, is around 48 lakh tonnes. Last year, the opening balance of sugar during September was around 75 lakh tonnes and this year, it would be around 125 lakh tonnes. Under these circumstances, how was it possible for mill owners to pay Rs 200 per tonne incentive to each farmer, he questioned.
He did not rule out the possibility of the prices of sugar hitting rock bottom once the government calls for tenders to sell around 30 lakh tonnes of sugar seized from private and co-operative sugar mills. He said the prices may drop to Rs 8 to 10 per kg and the government would have to pay farmers from its coffers since the seized stock would not yield Rs 925 crore. Besides, there would be entry of sugar stock from other states including Maharashtra in the coming days which would further complicate the situation. "Can the CM check the entry of sugar from other states into Karnataka", he questioned.
Mr C. Pawankumar, president of SISMA, Karnataka branch, told Deccan Chronicle that private sugar mills were going to face problems in securing loan from banks to run factories since the government had seized the sugar stock from mills. All these years, banks were giving loans by keeping the sugar stock as collatoral security to advance loans. Henceforth, on what guarantee would the banks give loans to sugar mills...will the government provide the bank guarantee, he asked. He said the future looks bleak for sugar mills as far as Karnataka is concerned.
State government in a fix
The state government is finding it hard to find a way out of the ongoing sugarcane crisis. Sources said the government would be caught on the wrong foot if private sugar factories decide to give up their stake in the factories. The government would be unable to run these factories if factory owners hand them over as a mark of protest. The sources also said that since the prices of sugar stocks had crashed, the government has to seize more sugar as it had warned, to gather the funds required to clear the dues factories owe farmers.
