Sugarcane glut kills hopes of farmers

While Brazil survived the crunch by using cane to make ethanol instead of sugar, idea of blending ethanol with petroleum products did not take off here

Published: 28th August 2016 04:51 AM  |   Last Updated: 28th August 2016 04:51 AM   |  A+A-

THANJAVUR: By all accounts, it was a bumper sugarcane harvest last season for S Pitchaiyan from Kurungulum in Thanjavur. His 18-acre field yielded 870 tonnes. But that did not help much as the sugarcane glut drastically brought the price down.

Thus, even before he could celebrate a good season, Pitchaiyan and his wife were into calculating the money they need for household expenses, including the school fees for his two children whom he had just admitted to top private schools, and the money that they raised by loan and by borrowing from others.

There are thousands of farmers in Tamil Nadu in a similar situation after the sugar mills refused to pay the State Advised Price (SAP) of Rs 2,850 per tonne fixed by the State government. In fact, in most cases, those like Pitchaiyan have not even received the Fair and Remunerative Price (FRP) of Rs 2,300 per tonne fixed by the Centre.

The State-owned Arignar Anna Sugar Mills (AASM), which used to pay him the SAP in the previous years, paid him only Rs 2,000 per tonne. Even that took time coming, he said, alleging that the payment for the cane supplied in December-January reached him only in March-April. “I was forced to borrow Rs 5 lakh as loan at an interest rate of 36 per cent per year to meet household expenses,” he said.

Factoring in the Rs 100 per tonne deducted as transportation charge, the mill owes him Rs 6.52 lakh as arrears as per the SAP. Little wonder then that he is not interested in pruning the standing crop, which requires additional expenditure.

“If the authorities fail to take an effective action to redress the situation, I have no choice but to return to crops such as cashew.” Return, because the field that now has sugarcane was once a cashew grove, before being converted about 15 years ago. That was when the crop had an assured market with mills entering into agreement to purchase the registered cane, and also arranged tie-up loans with banks.

But all that is in the past. Their leaders claimed that the mills owe about Rs 150 crore to the farmers in the delta districts alone in the last two years. In the recent days, there have been several instances of sugarcane farmers turning to agitations seeking the money that is due to them from the mills.

The impact of this strife is evident on the ground, where the area under cultivation has come down drastically over the years. Compared to 2011-12, it has been reduced by 87,000 hectares due to water shortage and farmers turning to other crops, said mill industry sources.

“In Thanjavur, for instance, the normal area of sugarcane has been 11,000 hectares. This year, however, only 4,984 hectares has come under cultivation so far. It would not exceed 6,000 hectares,” said an official from the Agriculture Department.

K Mohan of Thiruvaigavoor is one such case. Three years ago, he cultivated sugarcane in five acres, which was supplied to a private mill in Thirumandankudi. It now is a meagre 0.2 acre. Just a patch.

“For the last three years, the South Indian Sugar Mills Association has been refusing to pay the SAP of Rs 2,850,” he reasoned his decision to reduce the area of sugarcane cultivation so drastically.

The FRP amount was realised only after 15 months. For an average farmer, this means he cannot begin the next crop. “I had to borrow Rs 1.5 lakh to admit my son to an engineering college,” Mohan said.

He has turned to black gram and paddy, and is now preparing for the Samba crop - that is now under serious risk due to Karnataka’s refusal to release water.

Like Pitchaiyan who spent over Rs 10 lakh to set up the drip irrigation system, many farmers had turned to technology while taking up sugarcane cultivation under the Sustainable Sugarcane Initiative (SSI) to increase productivity. This has now become a liability for them.

Farmer A Sarafoji, of Pullaboothankudi, has been cultivating sugarcane for long and had some good years initially – as much as 200 tonnes from five-acres. This yield came down after rodents cut the pipes (a widespread problem, said an official), before the vagaries in price made him switch to paddy. The drip irrigation system is obsolescent for all other crops they take up.

Those brave enough to continue, like Ramasamy of Minnathur, complained of depletion of groundwater and limited hours of power supply. He is now standing witness to his crops wilting.

According to an official from the Agriculture Department, farmers are fast losing interest in this long-term crop due to mills not paying the SAP. “With the cultivation cost hovering around Rs 50,000 to Rs 60,000 per acre, the return has been woefully inadequate to meet the family expenses,” he said. “They are now taking up paddy, pulses and horticultural crops instead of sugarcane,” the official added.

Now, it is the tie-up loan arrangement that is holding the remaining farmers back, as the assured market gives them a semblance of comfort when faced with the challenge of repayment.

The sugar mills, on the other hand, maintained that the last few years have been tough days even for them, many a time forcing them to sell the produce at a rate lesser than the production cost. “The market price was Rs 19-20, whereas our production cost was Rs 34,” said an official from a mill in Thanjavur.

The industry has been afflicted by a glut in the last year or so, incidentally brought about by the crude oil price crash. Brazil, the biggest producer and exporter of sugar, used to produce ethanol from the cane when the crude price was high. But after the price fell steeply, they have returned to produce sugar that flooded the international market, the official added. “Due to the low international price, we could not export,” the official said.

The situation has now improved with market price hovering around Rs 30 per kg, said industry insiders. However, due to the heavy losses accumulated over the last five years, the mills are not in a position to pay the SAP, they claimed.

The authorities are also regulating the sale of extra neutral alcohol, and the proposal to blend 10 per cent ethanol with petroleum products has not taken off.


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