Fifty-one-year-old Anand Reddy has been serving as president of South Indian Sugar Mills Association since December last year. He is also the managing director of Vijayanagar Sugar Pvt Limited located at Gangapur village of Mundaragi taluk in Gadag district. He claims that he has never had a dispute with farmers who supply sugarcane to his factory ever since he took over the co-operative mill a few years ago. In an interview with DC, he spoke on the sugarcane crisis. Here are excerpts.
Why is there a crisis in the sugar sector in Karnataka while in the rest of the country the problem does not seem so serious?
The sugarcane crisis prevails only in the two districts of Belagavi and Bagalkot in Karnataka. There is no problem with the fair and remunerative price (FRP) fixed by the Centre and the revenue sharing formula of the state government. The crux of the matter is the excess payment over FRP to be paid by sugar factories for the season 2017-18. We had agreed to pay more as the price of sugar was Rs 35 per kg in the market in September last year. Subsequently, the sugar price has dropped to Rs 25 per kg just because the government imposed restrictions on the sale of sugar. The possibility of paying more than the FRP is difficult because it is linked to the financial capacity of the factories. There is not much room for the state government to intervene in the issue either. It is acting just because some farmer leaders are exerting pressure. The role of the government is limited to ensuring FRP payment or the revenue sharing formula in which 75 per cent of the price of sugar sold in the market will go to farmers.
The formula had provided more price than the FRP to farmers in the earlier seasons and the excess amount was paid as the second installment. But, the sugar price in the market is now below the FRP and factories are facing financial constraints due to this.
What is so unique about the problems of Karnataka’s sugar sector?
There is nothing unique about the problems being faced by sugar factories in Karnataka. The mills in Telangana, Andhra Pradesh, Tamil Nadu and Maharashtra have paid only FRP of Rs 2,550 in the last season and this rate has been revised to Rs 2,750 by the Centre this year. We are required to pay more depending on the sugar recovery per tonne of cane which varies from one state to the other depending on climatic conditions. But all farmer organizations, who had been demanding higher price for cane, have accepted FRP in neighbouring states.
Some factories have paid what farmers demanded. Why are other mills not able to fulfill their demands?
Every mill is not in a position to pay as their financial position does not allow them to fulfill the demand of farmers.
You attended the CM’s meeting the other day. What did your association members say?
We have submitted before the chief minister that mills are ready to meet the requirement of the law on sugarcane price. We also agreed to pay 75 per cent of the revenue from sugar and other by-products such as molasses and biogas as per the Karnataka Act. We have been fulfilling all these rules every year.
Some districts have no sugarcane crisis while some others have no issues pertaining to farmers. Is there politics behind the current standoff?
I am not aware of the politics behind this. Obviously, there is a talk of political involvement that has instigated the farmers to launch an agitation against the sugar factories demanding more cane price. But, I am not going to comment on it.
The CM had told sugar mill owners that you created the problem and you solve it. The problem could not be resolved because politicians own sugar factories…
It is not true. Farmers got much higher than the FRP in 2016-17 in North Karnataka and these mill owners were politicians even then. Farmers have got higher rates for several years. These mill owners-cum politicians cannot deny more price if there is shortage of cane next year. It is purely a matter of competition and we have to pay if other mills are offering more. It depends on the demand and supply of sugarcane. In Bagalkot and Belagavi, farmers have many options when it comes to supplying their cane as there are around 60 sugar factories in 2-3 districts. But, the situation is different in other districts where farmers have no choice, but to supply to only one or two factories.
The sugarcane crisis crops up every year. Is there any permanent solution to it?
A permanent solution is already there in place in Karnataka in the form of FRP and the revenue sharing formula fixed by the Central and state government respectively. But, the mills are feeling tremendous pressure to procure additional cane to keep their factories running due to shortage of cane in the state. In the process, there is unhealthy competition among factories to offer more price than the FRP. The crisis has erupted because of scarcity of sugarcane in the two districts.
Are sugar mills geared up to face government action if they fail to fulfill farmers’ demand?
The government has no role beyond implementation of the FRP or revenue sharing formula. The Maharashtra government has already taken a stand that it can only enforce FRP and will take action against mills if FRP is not paid. The Karnataka government had seized sugar stock on earlier occasions to pay the pending bills of farmers.
Farmers claim that factories have pending bills to the tune of more than Rs 400 crore. What do you have to say on this?
I am not aware of any factory having payments pending to farmers. The government itself has collected the records and total amount due from all factories in Karnataka as per FRP is only around Rs 38 crore. These pending bills are only from two or three factories. Sugar factories in the state have paid Rs 10,000 crore to farmers for procurement of cane during previous season.
Will you meet the deadline fixed by the govt to resolve the issue?
The average sugar recovery is 10.5 per cent (i.e 105 kg per tonne of sugarcane) in Bagalkot and Belagavi district where the crisis has erupted this year. Therefore, factories have paid Rs 255 additional cash along with FRP of Rs 2,550 in the last season for recovery of five kg more of sugar. Different factories have different percentage of sugar recovery. The state government has asked us to pay Rs 2,250 per tonne ex-field in which the mill owners themselves will cut and transport the sugarcane crop from the land of the farmers to their factories. The farmers are demanding Rs 400 more for every tonne of cane. There is no need for the government to intervene again as we will resolve the issue within a fortnight.
