Union Minister Pralhad Joshi has accused the Karnataka government of making farmers’ lives difficult, while the Centre is implementing proactive measures for their welfare and long-term sustainability. In an open letter addressed to Chief Minister Siddaramaiah on Wednesday, Joshi claimed that the state government’s focus on funding its guarantee schemes has adversely affected farmers. He also highlighted that the absence of new Power Purchase Agreements (PPAs) in Karnataka has deprived its sugar factories of a stable revenue stream.
Union Minister stated that the Fair and Remunerative Price (FRP) of 355 per quintal for the 2025-26 season, at a 10.25% recovery rate, has been fixed based on the recommendations of the Commission for Agricultural Costs and Prices (CACP). This price provides a margin of over 105% on the cost of production-an unprecedented level of farmer protection. The FRP serves only as a minimum benchmark; States are free to declare a higher State Advised Price (SAP). However, Karnataka has not declared an SAP, leading to farmer grievances that are being unfairly attributed to the Centre.
He said, “It is equally concerning that from the beginning of the recent agitation until the eighth day, no Minister from the Karnataka State Government engaged with the agitating farmers. The fiscal and regulatory measures pursued by the State have, in fact, exacerbated the distress of both sugar factories and farmers. While neighbouring Maharashtra executed its last Power Purchase Agreement (PPA) as recently as April 2025, Karnataka’s last PPA dates back to 2017-18. PPAs provide assured income for cogeneration units and sugar factories, enabling them to secure bank financing. The absence of new PPAs in Karnataka has deprived its sugar factories of a stable revenue stream.”
“Since Ethanol Supply Year (ESY) 2013-14, distilleries have generated over 2.18 lakh crore in revenue, including 1.29 lakh crore from the sale of ethanol by sugarcane-based distilleries to Oil Marketing Companies (OMCs). This has enabled sugar mills to clear dues promptly and provided income stability to farmers, while simultaneously ensuring price stability in both ex-mill and retail sugar markets. The progress made by Karnataka in this field is notable. Until 2013, the supply of ethanol to OMCs in the entire country was a mere 38 crore litres, with a blending level of only 1.53%. Today, Karnataka-based distilleries alone have supplied 139.8 crore litres of ethanol during ESY 2024-25. For ESY 2025-26, an allocation of 133 crore litres has already been made for Karnataka distilleries,” he further added.
He said, “Between 2014-15 and 2020-21, the Union Government implemented a series of comprehensive assistance schemes to improve liquidity in sugar mills and facilitate the timely payment of cane dues, most of which pertains to the UPA tenure. These included support for buffer stock creation, export assistance, and reimbursement of carrying costs, among others. It is, therefore, incorrect to suggest that the Union Government is “evading the core issue.” On the contrary, the Centre has ensured both price stability and market diversification, while the responsibility for local implementation-such as payment enforcement, irrigation, and subsidy delivery- squarely rests with the State Government.”
Joshi stated in the letter, “While the State Government should have worked to reduce the burden on farmers, your government, in the name of funding various guarantee schemes, has instead financially squeezed the productive sectors of the economy. The Water Supply & Lifting Charge for sugar factories has been increased from 5 lakh to 1 crore per year. An Energy Cess of 60 paise per unit of electricity has been imposed. The VAT on diesel has been hiked by nearly 50%, yielding 7,000-7,500 crore in additional revenue. The State expects to collect 39,000 crore from liquor excise alone this year, with taxes as high as 270% on more than 30 products. Frequent increases in fuel prices-two major hikes in the last three years-have escalated transportation costs from 500-550 per tonne to 750-900 per tonne, directly burdening sugarcane farmers. Further, the State government imposed additional 3% road tax on new commercial vehicles under the Karnataka Motor Vehicles Taxation (Amendment) Act, 2024, increasing the input costs to farmers.”
