Fatal attraction

The prospect of good returns lures farmers into growing sugarcane, but the harvest turns bitter when factories, most of them politically connected, default on payments and force the farmers into a cul-de-sac of loans, debt and more loans.

At H. Malligere village in Mandya, a woman in her sugarcane field. It is the marginal, small and semi-medium farmers (who own up to four hectares of land) that have borne the brunt of the crisis.

ON June 7, Gurunath Mallappa Chapgaon, 48, was a worried man. A Lingayat farmer who owned four acres (1 acre = o.4 hectare) of land, he was distraught when he returned from Malaprabha Cooperative Sugar Factory. His only son, Bahu Gurunath Chapgaon, 17, needed to pay his fees at the industrial training institute (ITI) where he was studying. The concerned father had spent the past few months unsuccessfully trying to recover dues owed to him for the 43.886 tonnes of sugarcane he had delivered to the factory on February 23.

He also had unpaid loans amounting to Rs.3 lakh borrowed from Bank of India and from Karnataka Vikasa Grameen Bank (KVGB), a regional rural bank. He had borrowed this sum to dig four borewells on his farm, of which three had failed. It had all become too much for Chapgaon and he hanged himself on June 8. The bank passbook displayed by his son shows that the sugar factory had deposited a sum of Rs.78,166 in his account on June 9. It was, according to Bahu, a desperate response as news of the suicide became public.

To get to Chapgaon’s village of Badal Ankalgi, one needs to pass the majestic Suvarna Vidhana Soudha located on the outskirts of Belagavi (formerly known as Belgaum). Badal Ankalgi (part of Belagavi taluk) lies a half-hour away from this new legislative house, a seasonal hub of power where one session of the Karnataka Legislative Assembly is held annually. Chapgaon was one of the thousands of farmers who had barred the entry of legislators, temporarily holding up the Assembly session in December last year, demanding payment of arrears and an increase in the State advisory price (SAP) of sugarcane guaranteed to them by the State government.

Another farmer who was present at this protest was Hanumantha Timmanna Dasar, 27, a resident of Shirol in Mudhol taluk in the adjoining Bagalkot district. Dasar, a Dalit farmer who owned approximately five acres of land along with his brother, committed suicide on July 11. The drive from Chapgaon’s village in Belagavi to Dasar’s village in Mudhol passes through the Belagavi taluks of Bailhongal, Saundatti and Ramdurg, which have the densest sugarcane cultivation in the country. Stalks of sugarcane almost spill over onto the State highway and dominate the landscape on either side of the road as far as the eye can see.

Dasar’s hovel is in the midst of a dried sugarcane field with the characteristic red loamy soil of the region. His elder brother says that he had taken loans amounting to Rs.3.33 lakh from the KVGB and the district central cooperative bank, apart from unspecified sums from private moneylenders, as he waited for the arrears from sugarcane factories. Two borewells that he had dug on his farm failed. As his elder brother narrated this poignant story, a faint plume of smoke drifted towards the evening sky from the sugar factory in the background that seemed out of place in the bucolic landscape.

In south Karnataka, Ninge Gowda, a Vokkaliga farmer in Ganada Hosuru village in Pandavpura taluk in Mandya district, chose a particularly gory and symbolic way to die when he set his sugarcane field on fire and jumped into the blaze on June 26. Growers of sugarcane, form the largest segment of farmers who have committed suicide this year in Karnataka. Why this sudden surge of suicides among sugarcane farmers now?

Mills default

While the scale of the suicides has come as a shock, the signs of this crisis have been visible for the past two years. The price guaranteed to farmers by the Centre and the State has not been honoured by sugar mills/factories in the State. The cumulative build up of non-payments for two seasons (2013-14 and 2014-15; the sugarcane season is from October to September) has led to a spate of unprecedented suicides. On their part, factories state that the Fair and Remunerative Price (FRP) fixed by the Centre is unfair as it does not factor in the dynamic national and international price of sugar that works on the economics of demand and supply.

The growth and sale of this cash crop is linked to a variety of factors—starting with very local (such as the availability of sufficient water) to the international (such as the production of sugar in a particular year by Brazil, the world’s leading sugarcane grower). Inevitably, the small and marginal sugarcane grower, who is at one end of the chain, is the most vulnerable link in the sugar market.

In 2012-13, 50.64 lakh hectares (equivalent to 50,640 square kilometres, which is roughly the size of Punjab) was under sugarcane across the country, producing 338.96 million tonnes (mt) of the hardy crop. Uttar Pradesh is the leading grower of sugarcane, followed by Maharashtra, Karnataka and Tamil Nadu. In Karnataka, sugarcane is the leading commercial crop, with 4.25 lakh hectares (equivalent to 4,250 square kilometres, which is slightly more than the size of Goa) under the crop. From 2010-11, there has been a huge surge in production nationally, leading to a glut in the market.

In Karnataka, the major concentration of the crop is in a large swathe across the northern districts of Belagavi, Bagalkot, Vijayapura and Bidar bordering Maharashtra, which account for more than 80 per cent of the output. The remainder is grown mainly in Mandya in south Karnataka, with smaller quantities spread across the rest of the State. While more suicides have taken place in south Karnataka, one must turn to Belagavi to locate the provenance of this crisis, which has reached a tipping point, as almost half the sugarcane in the State is grown here. The district also has 23 of the 63 sugar factories of Karnataka.

The area under sugarcane has gone up significantly in Karnataka over the past few years as the number of sugarcane factories has increased. In 2003-04, for instance, only 2.43 lakh hectares was under sugarcane in the State. This went up to 4.25 lakh hectares in 2012-13. This means sugarcane cultivation in Karnataka went up by almost 75 per cent in the reported decade, while the figure for all-India increase, in the reference period, stood at 28 per cent. Farmers like Chapgaon also made the transition to sugarcane, lured by assured returns. Before this shift, he grew paddy and soyabean.

Attraction of cane

Sugarcane has several attractions for the farmer—it is a hardy crop less prone to the vagaries of weather and natural predations. It also requires less labour relative to other commercial crops, says R.B. Khandagave, director, S. Nijalingappa Sugar Institute, Belagavi. This is an attractive prospect for the farmer as agricultural wages have soared over the past decade. Sugarcane takes 12 to15 months to be ready unlike other crops that are far more labour intensive and have to be harvested two or three times in a year. Its only drawback is that it is water intensive. Karnataka has seen three years of drought between 2012 and 2014, and thus farmers whose lands are not irrigated, as in the case of Chapgaon, or are inadequately irrigated, as that of Dasar, often need to dig borewells to source sufficient water to grow sugarcane. When borewells fail, the farmer’s indebtedness increases.

The price fixed for sugarcane is also an important aspect for the farmer. The Central government policy on sugarcane pricing is governed by the Sugarcane (Control) Order, 1966, and the FRP is decided by the Commission for Agricultural Costs and Prices (CACP). Sugarcane cannot be purchased by sugar mills below the designated FRP for that season and payment has to be made within two weeks. States go a step ahead and usually fix a higher SAP factoring in local conditions. In the case of Karnataka, the Karnataka Sugarcane (Purchase and Supply Control) Act, 2013, gives the State government the right to fix the sugarcane price. A constant rise in the FRP over the past decade made it an attractive crop, and the area under it increased. The FRP was less than Rs.1,000 a tonne a few years ago. It went up to Rs.1,391 a tonne in 2010-11 and further to Rs.2,200 in 2014-15.

Office-bearers of the South Indian Sugarcane and Sugar Technologists Association (SISSTA), who requested anonymity while speaking to Frontline , attributed this rise in FRP to the misplaced populist measures of the United Progressive Alliance (UPA) government, which was trying to lure the large base of sugarcane cultivators in Uttar Pradesh. “The abnormal increase in FRP was not calculated scientifically keeping in view the retail price of sugar. In the years that the retail price of sugar is less than the FRP, the Central government should pitch in with the balance,” stated one member of the SISSTA. “Sugar factories are unable to pay the arrears and now the situation is such that we won’t pay such an unfair rate. The cost of production is around Rs.32 a kilogram, but the realisation rate of sugar has fallen significantly,” added Jagadish H. Kulkarni, manager, Ugar Sugar Works, Belagavi.

There is a certain calculated logic in such statements, but the fact remains that sugar factories have reneged on payments to sugarcane farmers. Even the High Court, in an order in November 2014, upheld the State government’s right to fix cane price, meaning that sugar factories would have to pay the designated price.

While large cultivators of sugarcane have also been affected by this crisis in sugarcane pricing, it is the marginal, small and semi-medium farmers (owners of up to four hectares of land) that have borne the brunt of the crisis. This is partly because of the nature of dealings that the sugar factory has with the large farmers vis-a-vis the smaller farmers. Factories in Belagavi send gangs of men to harvest the cane when the crushing season starts in November, and invariably, small cultivators are ignored until the very end of the season. “In Chapgaon’s case, for instance, his crop on four acres produced approximately 44 tonnes of sugarcane when it was harvested in February. If, instead, the cane had been cut in December last year when the crop was at its ripest, the output would have been double that amount,” said Prof. T.T. Murkatnal, president, North Karnataka Sugarcane Growers’ Association.

The nature of cultivation by small farmers is also dependent on annual crop loans that are taken at the beginning of every season. In Chapgaon’s case, his passbook revealed that he had taken a crop loan of Rs.50,000 in 2012, repayment of which was pending. If farmers do not receive the expected price when the crop is harvested, they usually raise another loan to pay the primary loan, thus getting trapped in a vicious circle.

Political interest

Cultivators who are members of a particular sugar factory are also obligated to send their cane to a factory in their area, thus leading to a form of contract farming. (The installed crushing capacity of a factory varies between 2,500 and 20,000 tonnes of cane a day.) This policy has also been questioned by farmers as certain factories, especially the ones not controlled by politicians, have a better reputation in guaranteeing prices. Here, it is useful to mention that 12 of the 18 MLAs from the region, from both the main parties, the Congress and the BJP, and the MPs from the district have an interest in sugar factories. The chairman of the sugar factory to which Chapgaon had sent his stock of sugarcane is D.B. Inamdar, a Congress MLA. Most sugar factories in Belagavi, as in the rest of the State, are privately owned while the remaining are managed by farmers’ cooperatives (again indirectly controlled by private sugar factory owners). A tiny number, two in the case of Belagavi, are in the public sector.

It is not hard to understand why politicians have such strong interests in controlling the sugar factories in the region. According to an estimate made by a local journalist from Belagavi, who did not want to be named, there are 15,000 to 20,000 sugarcane cultivators who are obligated to a factory. Thus, the person who controls a sugar factory can easily influence the voters in the vicinity of his factory. Nagesh Sorgavi, president, Bagalkot District Sugarcane Growers’ Association, said: “While the miners controlled the Republic of Bellary, it is the sugarcane barons who control the Republic of Belagavi!”

There are several problems in the sugarcane trade that need to be addressed immediately. First, there is a need to re-evaluate the FRP and the SAP of sugarcane. Once sugarcane is sown, the crop’s rooting and growth pattern is such that its cultivation is automatically renewed for two further seasons, trapping the farmer for three years. Second, farmers need to be paid their arrears from the past two seasons promptly. Third, every time a new factory comes up in an area, contracts are made with farmers, encouraging them to grow sugarcane with the assurance that such cane will be bought at the designated price. This is what has happened in several parts of the country and particularly in Karnataka. Factories were set up when the price of sugar was good, and farmers were lured into growing sugarcane, but now such commitments are not being honoured. The State government’s response to this impending crisis has also been lethargic and the political connections of sugarcane factory owners partly explain this attitude.

For the farmer, the issue is simple: once the price is guaranteed by the Centre and the State government, why is he not being paid what is due to him by the sugar factories? Arrears to the tune of approximately Rs.1,800 crore are pending from 2013-14 for sugarcane cultivators in Karnataka. Add to this the unpaid dues for 2014-15, and the scale of this crisis can be understood.

Complaint with NHRC

Farmers’ leaders like Kurubur Shanthakumar, president, State Sugarcane Growers Association of Karnataka, demand that certain recommendations of the C. Rangarajan Committee (2012), which advocated sharing of profits from the sale of sugar and the by-products of sugarcane processing, such as molasses, ethanol and power cogeneration, be implemented immediately. His second demand is that farmers’ loans be written off. “If the Central and State governments can extend soft credit to sugar factories to bail them out, it is only fair that they write off farmers’ loans,” he stated. The association has even lodged a complaint with the National Human Rights Commission seeking its intervention. This complaint has received vehement endorsement of farmers’ leaders from across the country, including sugarcane growing areas of Maharashtra and Tamil Nadu.

Chapgaon’s family was paid Rs.2 lakh as compensation by the district administration apart from smaller assorted sums by various politicians, but it is obvious that this hardly makes up for the deep void that his death has caused. All his young daughter can say is that she misses her father. The complicated pricing policy of sugarcane does not make sense to the family. Bahu, particularly, seems affected. All he knows is that his father was not paid what was due to him from the sugarcane factory and has left him wondering whether he should attempt to grow sugarcane again. The sweet life that sugarcane once promised has turned sour for Chapgaon’s family and thousands of other sugarcane farmers in Karnataka.