The Hon. R.M. Ranjith Madduma Bandara

¶ 01 Hon. Presiding Member, about 50,000 farmer families, around 10,000 permanent workers, about 8,000 tractor owners, and another 10,000 service providers depend on this industry. The present Government pledged to end corruption and provide a better life for workers, but now farmers have not been paid for three months by Pelwatte and Sevanagala; tractor hire charges are unpaid; Ethimale and Gal Oya have not paid farmers for two months; and workers’ wages are delayed.

¶ 02 Sri Lanka annually needs about 650,000 metric tons of sugar; we import 570,000–580,000 MT, producing only about 80,000 MT—roughly 13% of requirement. The problem is the lack of a mechanism to sell locally produced sugar, while imports undercut local product. VAT of 18% is imposed on sugar from local factories; if the ex-factory wholesale price is Rs. 200 per kg, VAT is Rs. 36. Imported sugar has no VAT, only about Rs. 50 as duty. Factories also pay various levies: 30% on sugar, 45% on ethanol by-product, and Rs. 10,000 per ton on molasses—charges ultimately borne by farmers.

¶ 03 Factories are now loss-making; thousands of tons of sugar are in warehouses; ethanol cannot be sold. Annual ethanol demand is about 35 million litres, but due to higher arrack prices and illicit liquor, current demand is about 25 million litres. Local production was 13 million litres in 2023 and about 12.98 million in 2024, down from about 21 million litres previously. Meanwhile, ethanol has been imported, legally or otherwise, depressing local ethanol prices to around Rs. 400–800 per litre, making operations unprofitable.

¶ 04 Historically, Gal Oya began in the Senanayake era; Sevanagala and Pelwatte started under J.R. Jayewardene; Ethimale started under the Good Governance Government. We still produce only about 13% of our requirement, spending about Rs. 117 billion annually on sugar imports, compared with Rs. 60 billion on fertilizer and Rs. 88 billion on wheat flour.

¶ 05 Pelwatte once produced 50,000 MT (1993) and Sevanagala 20,000 MT, but output has fallen due to poor maintenance, weak cultivation practices, lack of new cane varieties, and lower recovery rates. There were also prolonged agitations in earlier years affecting factories. Today, protests continue in Pelwatte and Sevanagala due to unpaid dues. Many towns—Buttala, Wellawaya, Sevanagala, Thanamalvila, Siyambalanduwa—grew around these factories; their decline hurts livelihoods and foreign exchange.

¶ 06 Please remove VAT on local sugar so factories can compete with imports. In India, cane growers receive about Rs. 14,000 per ton; in Sri Lanka only about Rs. 10,000, while India enjoys lower power and fuel costs and better technology. Farmers here are in dire straits. Tractor owners face repossessions due to unpaid hire. Tell us when farmers’ dues will be paid, how stocks will be sold, and how ethanol imports will be curbed so local ethanol can be marketed.