For the time being, it seems the continuing impasse over sugarcane prices is over. With the Uttar Pradesh government agreeing to dole out a financial package to the private sugar industry, and the Maharashtra government reaching an agreement over the prices to be paid to protesting farmers, the already delayed crushing season is beginning to start. But with two farmers committing suicide, one in Lakhimpur in Uttar Pradesh and another in Belgaum in Karnataka in the past few days, and farmers still protesting in several parts of the country, it is not all that sweet on the sugar front.
A high price for sugarcane last year had brought in more area under the crop, and with a bumper harvest expected this year, the farmers feel let down for not being paid adequate remunerative price. The sugar mills, sitting on a very comfortable buffer stock of sugar this year, found it the right time to form a cartel seeking more financial support as well as increasing its bottom line by refusing to pay a higher price to growers. The Indian Sugar Mills Association has first declined the Uttar Pradesh government’s offer to set-up a high level panel to look into linking cane and sugar prices but eventually walked away with a Rs 800-crore plus package. Aware of the face-off, the UPA Govt has finally asked agriculture minister Sharad Pawar to resolve the stalemate by inviting all stake holders as well as the chief minister of Uttar Pradesh and Maharashtra. With Sharad Pawar’s interest in sugar, I don’t know how a meaningful solution is expected. In fact, it is because of faulty government interventions all these years that the crisis has taken a cyclic route, emerging every four to five years.
The question that I am being repeatedly asked is whether farmers are justified in demanding a higher price. Yes, farmers are within their legitimate rights to ask for a higher price for their produce. After all, if government employees can get DA linked to inflation every six months, and after every few years get the benefit of a pay commission, the farmers too deserve to get an assured economic price linked to inflation for their crops. Farmers alone cannot be expected to carry the burden of providing cheaper sugar to the consumers.
Sugar mills on the other hand are defiant. Nearly 76 of the 99 private sugar mills in Uttar Pradesh have given a suspension notice to the state government. Private sugar mills in Maharashtra and Karnataka too have refused to operate. The mills’ stand is that they are not in a position to pay more than Rs 225 per quintal as cane price, which is Rs 55 less than the state advised price in Uttar Pradesh. Agitating farmers are demanding Rs 300 per quintal. In Maharashtra, sugar mills had first offered to pay only Rs 240 per quintal against the demand of Rs 300. But finally, as part of the agreement reached with farmers, the mills accepted Rs 265 per quintal as the price to be paid in two instalments.
Before we go into the specific case of sugarcane prices, let us first look at the economics of agriculture in general. Several studies have shown that farmers as a class fall in the lowest category of income slab in the country. The ministry of agriculture has acknowledged in Parliament that the average monthly income of a farming family is less than Rs 2,400 per month. This is less than what we in the cities pay to our maid servants. It shouldn’t shock people to know that roughly about 60 per cent of daily wage workers under MNREGA are actually land owners.
Sugarcane farmers are no exception. Except for some big farmers, most cane growers are small farmers whose livelihood depends upon sugarcane alone. Let’s not forget that unlike wheat and paddy, sugarcane is an annual crop. Farmers wait for a year to get a remunerative price. The one-time payment they receive for the sugarcane crop runs their families expenses throughout the year. Often they are not paid for months if not years. In Uttar Pradesh alone, cane arrears stand at Rs 2,400-crores. And when sugar mills across the country form a cartel and refuse to pay a remunerative price, what do you expect the farmers to do?
Sugar industry cites crumbling economics. Many believe that it is time that book-keeping by the industry is brought under a scanner. I am not saying that sugar mills are indulging in unfair practices but it is certainly important to find out how the mills are paying dividends when they claim to be running in losses? How are personal assets of owners are growing while the mills are sliding into red? How come sugar mills, which I consider to be amongst the most pampered of the Indian industry, should be showing losses despite receiving inter-free loans, export subsidies and generous financial packages and exemptions? These questions needs solid answers.
