The Hindu : Udupi's only sugar factory fighting for survival

Online edition of India's National Newspaper
Sunday, Sep 14, 2003

Southern States

Southern States - Karnataka

Udupi's only sugar factory fighting for survival

By Ganesh Prabhu

Udupi Sept. 13. The Dakshina Kannada Sahakari Sakkare Karkhane, popularly known as the Brahmavar Sugar Factory, is fighting for survival. Faced with an accumulated loss of over Rs. 24 crore, the only sugar factory in Udupi district is yet to pay dues worth Rs. 3 crore to farmers.

Established at a cost of Rs. 8.75 crore due to the efforts of the cooperative leader, B. Narayana Nayak, the factory, which started functioning in 1985, is now in deep crisis.

Though the management of the factory approached the State Government seeking financial assistance of Rs. 5 crore to overcome the crisis plaguing the factory, the Government only released Rs. 1.2 crore.

The sugar factory was established on the premise that the Varahi Irrigation Project, which was expected to irrigate 38,800 acres of land, would boost sugarcane cultivation in the district. It was assumed that the Varahi project, when commissioned, would bring a minimum of 12,000 acres of land under irrigation, resulting in the production of over 2.5 lakh tonnes of sugarcane.

Though the foundations for the factory and the Varahi Irrigation Project, were laid at the same time, the former materialised while the latter is still under construction. In view of the delay in getting approval from the Central Water Commission for the Varahi Irrigation Project, the State Government took up the Varahi Lift Irrigation Scheme to provide irrigation to 2,723 hectares of land. But the scheme has progressed at a snail's pace due to want of funds.

By the time the factory started, the farmers of Udupi and Dakshina Kannada districts, who had taken up sugarcane cultivation in a big way in 1970s, started growing other cash crops. Sugarcane was being cultivated on about 6,000 acres of land when the factory started functioning. According to an estimate, only 3,000 acres of land in both the districts are under sugarcane cultivation now, and nearly 60,000 tonnes of sugarcane is being produced.

The cane crushing capacity of the factory is 1,250 tonnes a day. To run the factory "without any trade loss", the factory should operate for a minimum of six months, and a minimum of 1.25 lakh tonnes of sugarcane should be crushed. At least 2.25 lakh tonnes of cane should be crushed to run the factory on a no profit, no loss basis. But the factory is crushing only about 70,000 tonnes of cane a year. In 2002-03, only 56,700 tonnes of cane was crushed in the factory.

The poor cultivation of sugarcane in Udupi and Dakshina Kannada districts is mainly due to fragmented landholdings, which increases transportation costs. The farmers in the district are not averse to cultivating sugarcane, provided the right kind of support comes from the factory. Besides, the returns on sugarcane is more than that on paddy, which is the chief crop in Udupi district.

The factory is giving preference to sugarcane grown by farmers in Udupi and Dakshina Kannada. It cannot afford to purchase sugarcane grown by farmers in other districts as the transportation costs are too high.

However, farmers cite the dues owed by the factory as their main grouse against growing sugarcane and supplying it to the factory. The factory is yet to pay Rs. 96 lakh to farmers for the sugarcane supplied in 2001-02, and Rs. 2.20 crore for the cane supplied in 2002-03.

The factory has 211 employees and, according to reports, they have not been paid their salary for the past 12 months. According to the chairman of the factory, M. Jayasheela Shetty, though 94 employees of the factory have opted for the Voluntary Retirement Scheme, the factory has no money to make a one-time settlement.

The factory's hopes now lie in the Rs. 3.8-crore assistance awaited from the State Government. Efforts are on at the political level to hand over the Varahi Irrigation Project to the Karnataka Neeravari Nigam (KNN).

Mr. Shetty says that the factory management has urged the Union Government to release Rs. 2.5 crore from the Sugar Development Fund to promote sugarcane cultivation in Udupi and Dakshina Kannada districts. He is also optimistic that the completion of the irrigation project will solve the problems of the factory.

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Udupi's only sugar factory fighting for survival