Cane Monologue
- Three weeks past the sugarcane-crushing season, most sugar mills are yet to start operation
- Rangarajan panel formula of linking cane price with retail sugar prices has no takers among farmers
- Mill owners, who already owe farmers Rs 3,200 crore, are unwilling to accept state-advised price
- With mounting farmers’ protests, PM appoints panel to resolve issue
- Stocks of 8.8 m tonnes on Oct 1 ensure no shortage in supplies
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Three weeks into the sugarcane-crushing season, politics has its stranglehold over the sugar heartland. In the eyeball-to-eyeball confrontation, there is little sign of either mills or farmers relenting on the issue of sugarcane price. ‘Chakka jams’ and deflating tyres of trucks laden with sugarcane is being reported in Maharashtra, the largest producer of the crop, and Karnataka.
In Uttar Pradesh—the second-largest producer—the situation is close to a boil, with mill owners showing no signs of agreeing to pay the government’s fixed state advisory price, which is unchanged from last year. It should be noted that agriculture input costs have actually increased, according to government advisory bodies.
Unfortunately, little thought has been given to the plight of farmers so far, particularly in UP, where mills have not cleared last year’s dues totalling Rs 2,400 crore. Altogether, the sugar mills’ arrears total Rs 3,200 crore.
“There is lack of governance and of political will to find a long-term solution,” says Ajit Singh, Union civil aviation minister and a prominent farm leader, who has announced a chakka jam in UP on December 1, ahead of the brief winter session of Parliament. Following a representation by Maharashtra chief minister Prithviraj Chavan, the prime minister has appointed a three-member team, including the Union finance minister P. Chidambaram, agriculture minister Sharad Pawar and Ajit Singh, to work out a solution.
Ajit Singh is not sure when the team will be ready with a formula and seek cabinet approval. Under study will be a proposal to provide loans to mills to help them clear their dues (the interest will be paid through the Sugar Development Fund). There will be other sops, like increasing duty drawbacks to help exports and oil companies being asked to increase purchase of ethanol from sugar mills.
Given that last year the government partially decontrolled the sugar sector by unburdening mills of the onus of having to provide subsidised sugar for PDS, removing control on the monthly release of sugar, and deciding to accept the Rangarajan committee formula for sugarcane price fixation, the annual crisis was expected to be a thing of the past. But the scenario remains unchanged, with farmers reluctant to adopt the formula and mill owners supporting its adoption.
“The Rangarajan formula has failed to address farmers’ concerns as it has linked sugarcane price with the domestic sugar price, not a formula based on input costs and returns. It did not think about the sustainability of sugarcane cultivation,” asks Sudhir Panwar of the Kisan Jagriti Manch.
In Karnataka, attempts by the state to implement the formula have failed. The state government now plans to give subsidy to help mills pay a better price to farmers. In other states, there is an element of distrust, since retail sugar prices ahead of the new sugar season in October slipped by Rs 4-6 per kg to Rs 29. “There are problems with the Rangarajan formula, as price of sugarcane will depend on realisation of sugar price. In UP, farmers don’t trust the realisation figures given by mills,” says Ajit Singh. He highlights the risk of sugar prices crashing in case of high production or imports.
In the normal course, the mills start full operation in November. Reports from three of the largest sugarcane-producing states indicate that hardly 10-20 per cent of the harvest and crushing has taken place so far. “This is all a political game to crush the agitating farmers, who are unwilling to be cheated by the mills,” says Raju Shetti, MP and leader of the Swabhimani Shetkari Sangathana. Shetti alleges foul play by the market leaders.
But who benefits from the prolonged standoff between the two parties? Clearly, not farmers, given the highly perishable nature of the crop. With 8.8 million tonnes of sugar in stock, there is no urgency from the government too. Abinash Verma, director-general of industry lobby ISMA, warns that any delay in resolving the impasse “could result in lower sugar production and spurt in sugar prices”. That’s a higher price for consumers to pay in election season.
