1.1 Company background
Sevenagala sugar factory is one of the sugar factories managed by the Lanka sugar company (Pvt) Ltd. Sevenagala sugar factory located at a rustic village called Sevanagala in the Uva province. Sugar cane cultivation in Sevenagala has been carried out since 1985. Apart from the nucleus estates managed by the Sevanagala factory, sugar cane has been cultivated by farmers under both irrigated and rain fed conditions, with the help of inputs and other services provided by the factory.
There are about 3000 farmers who belong to this factory. The total sugar cane land in Sevanagala is nearly 4215 Ha. The settler farmers are bound to cultivate only cane in these lands and cane to be supplied only to Sevanagala sugar factory. According to the locations of the farmers this land is divided into 7 divisions. In addition to that, there are farmers who cultivate sugar cane outside the factory lands. These farmers are identified as out grower farmers. Sugar factory provides farm inputs to the farmers and provide farm machineries to prepare farm lands of farmers. These expenses will be recovered when farmer supply sugar cane harvest to the factory after 10 – 12 months.
In the year 2002 the government decided to sell Sevanagala sugar industries limited to private party. After privatization, the farmers used to convert for other crops, and the farmers those who continued with cane cultivation practiced to sell their crop to private small scaled mills operated in region.
According to the Sevanagala Sugar Industry Annual Report (2012) the major reasons for farmers to shift from sugar cane cultivation to other crops
• Law price paid for sugar cane
• Poor relationship among the management and farmers
• Higher interest rate charged for loans and servicers granted for farmers.
• Distribution for poor quality fertilizer
• Unnecessary delays in payments
Due to these reasons the government decided to recapture Sevanagala Sugar industry Ltd in 2011, the organization was taken over by the government under the revival of Underperforming Enterprises and underutilized assets Act no 43 on 11.11.2011.
Lanka Sugar Company (Pvt) Ltd was formed by the government and Sevenagala Sugar industry now coming under the management purview of the company.
According to the (Sevanagala Sugar Industry Annual Report, 2012) Mission of the company is “To be the leading contributor towards improving living standards of the sugar cane farmers by having most motivated employees in the industry while achieving desired profits and saving foreign exchange to the country”.
1.2 Current process of farmer payment scheme.
There are about 3000 farmers cultivate sugar cane in Sevanagala sugar factory. These farmers are divided in to six divisions. Farmers are in first three divisions are rain fed cultivation farmers and next three division farmers are irrigated cultivation farmers. In addition there are 30 out grower farmers and 200 nuclear farmers belongs to this...