Tamil Nadu’s sugar mills face crises owing to low sugarcane production and liquidity constraints. At least 14 out of 25 private sugar mills in the state to remain shut in 2019-20.
In a high-profile meeting attended by Department of Financial Services (DFS), bank officials, State government and South Indian Sugar Mills Association (SISMA) expounded the hardships faced in sugarcane industry and asked for help from the government. The meeting was held to discuss issues relating to sugar industry and sugarcane growers of Tamil Nadu.
Representatives of SISMA appealed for staggering repayment and restructuring of debts. They also requested government to provide a special relief package entirely for the sugarcane industry.
Poor Capacity Utilisation of mills
SISMA representatives said that the sugarcane planting area in the state had decreased drastically. This has led to poor capacity utilization of mills. The capacity utilization dropped down to 35% in 2018-19 from 99% in 2011-12.
Reduced Sugarcane Production
The sugar production in the state has dropped down from 23.75 lakh tonnes to a mere 8.6 lakh tonnes in 2018-19.
Deficient rainfall in the state in past five years stressed the sugarcane industry. Thereby, reducing the production and planting area of the industry.
Increase in Cost of Production
The decision to stop commencement of operations of sugar mills accounts for the fact that cost of production for operating mills at lower capacity has increased. The cost of production of such mills increased by Rs 10 per kg against lower production cost in Northern states.
EID Parry India, in July announced the decision to shut down its unit in Pudukottai in Tamil Nadu. The factory was not operating due to deficiency of adequate sugar cane. The prospects in future are less as the cultivation of sugarcane in that area is hindered due to various factors.
Farmers requested help from government
Representatives of farmers expressed their worries over the persistent drought, withering crops, their unpaid dues and escalating debts. They also asked for a special relief package to help them with the NPA issue.
Proper Relief Measures may Ease the Stress
SISMA officials said that the industry has started to turn around. In addition, proper relief measures would further ease industry stress in the next 18 months. They requested Banks and RBI to consider fresh loans and restructuring.