Sugar mills in Karnataka are likely to incur losses this year due to higher payments to farmers for sugarcane, reduced ethanol allocation by oil marketing companies (OMCs), and the continued non-revision of the minimum selling price (MSP) of sugar, reported Deccan Herald.
As per the news report, mills are likely to suffer a loss of between Rs 50 crore and Rs 200 crore, said Yogesh Shrimant Patil, President, The South Indian Sugar Mills Association (SISMA), Karnataka.
In a memorandum submitted to the chief minister, Patil urged chief minister siddaramaiah to head a delegation to the Central Government to press for an increase in the MSP of sugar from Rs 31 per kg to Rs 42 per kg. He also called on the state government to enter into a 10-year power purchase agreement with sugar mills to buy surplus electricity generated by them at Rs 6.5 per unit. In addition, the association sought full procurement of ethanol produced by the mills, the news report further added.
Patil said that the additional cane price would further strain the industry at a time when mills are already under pressure due to reduced ethanol allocation and the lack of revision in sugar MSP.
Under the state governmentтАЩs order, sugar mills have been asked to pay Rs 3,300 per tonne of sugarcane for a recovery rate of 11.25%. Of this amount, factory owners will bear Rs 3,250 per tonne, while the government will contribute Rs 50. For sugarcane with a recovery rate of 10.25%, the price has been fixed at Rs 3,200 per tonne. The decision followed detailed discussions held by the chief minister with sugar factory owners and farmersтАЩ representatives in November last year.
