Hike in Support Prices of Sugarcane Only an Eyewash

Following higher sugar production and plummeting wholesale prices, dues to be paid to the sugarcane farmers by the mills are piling up, worsening the crisis of the sugarcane farmers.
 

India’s sugar production witnessed a steep hike of 6.7 per cent till December 31, 2018.

India is the second largest producer of sugar (with a global share of 17.1 per cent) in the world after Brazil. Within India, Uttar Pradesh (36.1 per cent), Maharashtra (34.3 per cent) and Karnataka (11.7 per cent) are the three largest producers. As on December 31, 2018, 501 operational sugar mills in the country had produced 110.52 lac tons of sugar. However, the demand of sugar remains stagnant which has further depressed the sugar prices, and has increased the arrears.

Arrears payable to sugarcane farmers by the mills in the 2017-18 season have crossed Rs 23,000 crore across the country with UP accounting for almost half of it.

With the deepening crisis, the BJP [state] governments across the country are rushing into damage control mode with only four months to go for the general election.  

Recently, Uttar Pradesh, appears to have favoured a 12 per cent increase in the government-set floor price for the sweetener. The government is trying to set the minimum price for the sale of sugar at around Rs 29/kg to help the sugar industry. This is likely to be clubbed with a mechanism to ensure that mills don’t sell sugar more than a certain quantity. Each mill will be assigned a maximum quota of sugar they can sell every month. This will help regulate supplies in the market, and help prop up sugar prices.

Explaining the crisis, Jaswinder Singh of the All India Kisan Sabha told Newsclick, “Currently, the farmers are experiencing severe losses, as much as over Rs 1,000 per quintal. The policy of the increase in the MSP does not add up, and is not yielding any benefit to the sugarcane farmers, primarily because of this change in the formulation and more importantly, as it does not take into consideration the factors that influence the cost of production, water used, transportation costs etc.”

He added, “The biggest policy failure at the hands of the BJP government has been the fact that they have let the state governments take a call on the compensation that will be given to the farmers. On the other hand, the situation is extremely grave in states such as Maharashtra and Uttar Pradesh. The political apathy of the leadership has ensured that the issue has failed to assume a central agenda.”

The sugar mills from Maharashtra haven’t paid any money to the farmers even 50 days after buying their cane. With the farmers movement picking up pace, sugarcane farmers are now up in arms against the Maharashtra government after two farmers in Satara committed suicide following distress. The state is currently witnessing multiple agitations, as farmers are demanding a one-time payment of the declared fair remunerative price (FRP) rather than the two instalments proposed by the government.

N K Shukla from Sugarcane Coordination Committee said that they are demanding a minimum price of Rs 400 per quintal for sugar. “In many places such as Maharashtra, the mills have not paid the farmers in a long time, even though the by-products of sugarcane bring mills greater benefits such as ethanol, press mud, fertilisers etc.”

He added, “We are producing so much sugar that there is no need to import raw sugar from Latin American countries. This needs to be stopped.”

Activists on the ground believe that the worst is yet to come, given the high acreage of crop planting this time. The payment crisis can worsen the farm distress, as the farmers’ incomes have been stressed following fluctuating prices of horticulture crops. The government is merely compounding the problem by refusing to link sugarcane pricing to the price of sugar.

Read more: Maharashtra Government’s Rs. 150 crore Package for Subsidy, A Jumla?