Profit sharing formula in sugarcane prices introduced in Karnataka

The Belagavi district administration has succeeded in introducing a profit-sharing formula in fixing sugarcane prices for this year’s crushing season. Most farmer leaders welcomed the recipe.

This managed to break the deadlock between the sugar cane growers and the factories and allow the sugar mills to start operations.

Regional Minister-in-Charge Satish Jarkiholi said it was the first in the country to introduce a profit-sharing formula as recommended by the C Rangarajan Committee.

Most farmer leaders accepted this pattern and suspended their protest. On Friday, eight of the 29 factories in Belagavi district issued notices that they are starting crushing operations and will follow the formula.

Some leaders like Shashikant Padasalagi Guruji have expressed their displeasure over the formula, saying it is speculative and heavily dependent on the Union government’s efforts to revise the minimum selling price of sugar.

The agreement was struck between Satish Jarkiholi, former minister Shashikant Nayak, Rahul Shindh, in-charge deputy commissioner, sugar mill representatives and some farmer leaders. The Minister clarified that the issues of Minimum Selling Price of Sugar, Fair and Remunerative Price of Sugarcane and State Notified Price to be decided by the State Government are all issues that could be discussed later.

The formula is based on the understanding that farmers are both suppliers of raw materials and shareholders of factories. It involves an agreement that the farmers will be paid a base price which is higher than the fair and profitable price fixed by the Union Government and an additional amount which is provided as profit. It is not mandatory and may be irregular.

Profits will be calculated so that 75 percent goes to the farmers and 25 percent to the factory.

Mr. Shindhe said the ₹3,650 per tonne offered by factories as the base price was about ₹350 higher than the prices paid last year.

The details regarding payment for sugarcane are as follows: As per the agreement, ₹ 3,500 per tonne will be paid as the first installment. Once the crushing season is over, an additional ₹100 will be provided as the second installment.

Further payments will depend on the increase in sugar prices. If the average market price of sugar exceeds ₹ 45 per kg before the start of the crushing season, the final installment will be calculated based on this rate. The agreement specifies the price structure: if the average price of sugar is ₹ 48 per kg, the price of sugarcane is fixed at ₹ 3,650 per tonne; at ₹49 it is 3,750; at ₹50 it is ₹3850; and at ₹55 it is ₹4,350. After deducting the ₹3,600 already paid, the remaining surplus will be shared – 75% going to the farmers and 25% to the sugar mills.

To a question, Satish Jarkiholi said factories would be inspired to share profit if the union government fixed the MSP higher than the current one at Rs 31 per kilogram. “Market prices are not reliable. One day they increase, the next day they decrease. However, the revised MSP will stabilize prices and take factories out of risk,” he said.

Chunappa Pujeri, Karnataka Rajya Raitha Sangha and Hasiru Sene leader, said farmers will benefit from the profit sharing formula and a lump sum of ₹3,600 to be paid to farmers irrespective of market prices. He said the farmers dropped from their demand of ₹5,500 per tonne only because the farmers were already suffering due to severe droughts, heat, drying of sugarcane, delayed start of factory operations and potential loss of yield.

However, Mr. Guruji does not approve of the formula. “It is nothing but pie in the sky because it depends on whether Pralhad Joshi, the Union Food Minister, decides to increase MSP sugar or not. We will celebrate the deal only after farmers get at least ₹4,000 per tonne,” he told farmers in Gurlapur on Friday.

Mr. Shindhe appealed to the farmers to follow only the formula announced by the minister in the meeting and not believe other claims on some social media platforms. He also appealed to farmers’ leaders to allow factories to start crushing operations so that farmers do not suffer further losses.

Published – 06 Nov 2026 15:15 IST