Bitter story

FROM Rs.17 a kilogram barely six months ago to Rs.42 a kg now, sugar is fast running out of the common mans reach. The crisis is likely to turn worse because a massive shortfall in sugar production is expected this year. The shortage does not translate into higher prices for sugarcane farmers, however. Instead of paying a high price for sugarcane and facilitating early crushing, the government has opted to import sugar. Also, the low support price for sugarcane made some farmers burn their standing crop.

Sugarcane farmers across India today are an agitated lot. They are taking to the streets to register their protest and stopping road and rail traffic. They marched to the capital as Parliament convened for the winter session. And some took the extreme step of self-immolation. The countrys sugar consumption, according to official estimates, is 23 million tonnes, but this year production is likely to be 14.5-15 million tonnes only.

The sugar story is, in fact, a bitter one. An ordinance issued by the Ministry of Consumer Affairs, Food and Public Distribution (Sugarcane (Control) Amendment Order, 2009, dated October 22, 2009) changed the pricing regime for sugarcane, which was dictated by the Sugarcane (Control) Order, 1966. According to the new order, the support price for sugarcane, now called the fair and remunerative price (FRP) instead of the earlier statutory minimum price (SMP), shall be fixed by the Central government under Clause 3 from time to time. It also specified that any other authority fixing a price for the crop above the FRP would have to bear the difference: If any authority or State government fixes any price above the fair and remunerative price fixed by the Central government under Clause 3, such authority or State government shall pay the amount which it fixes above the fair and remunerative price as fixed by the Central government, to the grower of sugarcane or sugarcane cooperative society, as the case may be.

The practice so far was for States such as Uttar Pradesh (the second largest sugarcane-producing State after Maharashtra), Tamil Nadu, Punjab and Haryana to declare State-advised prices (SAP) that mills were required to pay the farmers. This was usually higher than the SMP, which was announced by the Central government on the basis of the cost of cultivation estimated by the Commission for Agriculture Costs and Prices (CACP).

However, on November 19, under pressure from an unrelenting Opposition, the government announced that it would remove the clause shifting the pricing burden to the States. Finance Minister Pranab Mukherjee told an all-party meeting that the clause that required State governments to pay the difference between the prices they announced and the FRP would be dropped.

The October 22 ordinance was followed by a notification by the Ministry of Consumer Affairs, Food and Public Distribution, which stated: The Government of India has fixed the fair and remunerative price (FRP) of sugarcane to be paid by the sugar mills for 2009-10 sugar season at Rs.129.84 per quintal linked to a basic recovery rate of 9.5 per cent subject to an additional payment of Rs.1.37 per quintal for every 0.1 percentage point increase in recovery above that level.

Farmers received the notification with shock and horror. According to figures compiled by the National Alliance of Farmers Association (NAFA), an umbrella organisation of farmers from across India, the input cost for one quintal of sugarcane is roughly Rs.233.52 now. The price announced by the government does not meet even remotely the input cost.

The sugarcane crop, meanwhile, is ready for harvesting. But because of the confusion about prices, the mills are not buying at the higher SAP that State governments had declared. The farmers, too, are not willing to sell at the declared FRP. But then they need to get their fields ready for the rabi season, which is about to start. So they are either burning their standing crop or selling it at throwaway prices to local crushers who make jaggery (gur). At least 25 incidents of farmers burning their crop have been reported from western Uttar Pradesh, the sugar bowl of the State.

Instead of working out a solution to benefit both farmers and mill owners, the Central government has allowed free import of raw sugar so that the mills can go ahead with the production of sugar, apparently to meet the domestic demand. This has angered farmers even more, and recently some of them burnt a train carrying imported raw sugar to a sugar mill in Shamli, Uttar Pradesh. The farmers ire has, for the time being, forced the Uttar Pradesh government to halt the movement of imported sugar on its territory, but a solution to the farmers woes remains elusive.

At a mammoth mahapanchayat of sugarcane farmers in Meerut on November 5, farmers vowed to cripple road and rail traffic all over India, barricade Parliament House and paralyse the functioning of the Lok Sabha and the Rajya Sabha. Various farmers organisations, which have united under the aegis of the NAFA, and parties such as the Rashtriya Lok Dal (led by Ajit Singh) and the Bharatiya Kisan Union (led by Mahendra Singh Tikait) joined hands and vowed to take their battle to its logical conclusion.

There is no way we can allow the government to play with the lives of 50 million farmers. The government, which claims to be a well-wisher of the farmers, is deliberately destroying sugarcane farmers so it can go ahead and import raw sugar, said Anil Singh, national secretary of the NAFA. In fact, the contents of the CACP report for 2008-09, which advised the government to increase the price of sugarcane, establish beyond doubt that the government slept over the repeated warnings by experts and that it deliberately pushed things in a particular direction so that import of raw and refined sugar became inevitable.

In 2006, India had a surplus sugar stock to the tune of 60 lakh tonnes. At that time the international price of sugar was Rs.20,680 per tonne, while the domestic price was Rs.13,000 per tonne. So if export of sugar was allowed then, the country would have earned precious foreign exchange. But the government banned the export of sugar in 2006. It resulted in a net loss of Rs.4,608 crore in terms of export earnings. In 2007-08, when international prices crashed to Rs.13,000 per tonne, the country exported 68 lakh tonnes!

In 2007-08, it became evident that the net area under sugarcane production was falling. The CACP warned the government in its report for 2008-2009 that unless it raised the SMP for sugarcane, the net area under the crop would continue to fall. The government paid no heed. The SMP for sugarcane in 2004 was Rs.79.25 a quintal, and in 2008-09 it was Rs.81.18 a quintal, despite the input cost having gone up substantially and despite a massive hike in the minimum support price of wheat and paddy.

The CACP, which submitted a supplementary report to the Agriculture Ministry on March 21, 2008, highlighting the anomalies in the pricing of sugarcane and other crops, stated: The SMP of sugarcane would have to be raised to Rs.175 per quintal to restore the inter-crop parity. In the same paragraph, the report explained how the increase in the support price for wheat and paddy was tilting the balance against sugarcane, the price for which had barely increased since 2004.

Instead of accepting my recommendations, the government terminated my services, says Dr T. Haque, who was the CACP chairman then. Dr Haque, an eminent agricultural economist, who now is the patron of NAFA, says inter-crop disparity has resulted in the diminishing of the area under sugarcane production. Last year the area under cane production was 4.38 million hectares, which has now gone down to 4.24 million hectares, he said. I hold the entire UPA [United Progressive Alliance] government, not only the Agriculture Minister, responsible for the sugarcane farmers plight today because CACP reports are discussed by the entire Cabinet, which declares the minimum support price for various crops. It is the entire UPA government that has failed the sugarcane farmers.

According to him, while deciding the minimum support price for sugarcane, the factors that need to be considered are the cost of production of sugarcane, the price of sugar in the market, inter-crop price parity, and the interests of farmers, sugar mill owners and consumers. But in deciding the FRP for sugarcane, none of this was apparently taken into account the price of sugar in the market has shot up to Rs.42 a kg, while the price to be paid to the farmer remains low.

According to Professor Sudhir Panwar, president of the Kisan Jagriti Manch president, an affiliate of the NAFA, all stakeholders in the game have been indulging in politics to nurse vested interests, making farmers suffer in the process. There is no one to genuinely cater to sugarcane farmers welfare, and ever since Sharad Pawar became the Agriculture Minister, sugarcane farmers have been the worst hit. His entire attitude seems to be import-oriented.

Refusing to be quoted, a senior Indian Sugar Mills Association (ISMA) functionary told Frontline that in the past few years the government seemed keen on importing raw and refined sugar. The government policy is skewed towards imports. While we have to face many restrictions, such as giving 20 per cent of our sugar for levy and not being allowed to store sugar for more than 15 days, those importing have no such restrictions, he said.

The ISMA president, Samir Somaih, wondered at the criteria used to arrive at the FRP. We have no clue about what factors were taken into account for arriving at the rate of Rs.129.84 a quintal. Ideally speaking, the government should let the sugar industry function as per market conditions, as is happening in Maharashtra, Gujarat and Karnataka, where the governments have nothing to do with sugarcane pricing. It is a matter between farmers and mill owners, and eventually the farmers, too, end up better off than their counterparts in SAP-ruled States such as Uttar Pradesh. I dont understand why the Centre should now become a stakeholder because more state intervention brings more confusion, he said. He added that sugarcane was not something for which a uniform price could be fixed for the entire country as sugar recovery, cane production and input costs varied from State to State.

The Parliamentary Standing Committee on Agriculture has been apprised of the matter by farmers representatives and will take it up for discussion in the last week of November. Talking to Frontline, the committee chairman Basudeb Acharya, Communist Party of India (Marxist) member of Parliament from Bankura in West Bengal, said the committee would try and ensure that the ill-intentioned ordinance, which was to come up for ratification by Parliament during the winter session, did not become an Act. We have spoken to MPs from all parties and there seems to be a near-unanimity on opposing this ordinance. It was discussed at the all-party meeting convened by the Speaker, too, and we hope to successfully stall it, he said.

However, sugarcane farmers have not yet been called for a meeting by the Agriculture Minister or the Prime Minister, though it has been some weeks since the agitations started on the streets. Their plight has been described to the Prime Minister and also to Congress president and UPA chairperson Sonia Gandhi in various memorandums, yet no action has been taken. A member of Parliament who contested the last Lok Sabha election on farmers issues, Raju Shetty from Kolhapur in Maharashtra, wrote to the Prime Minister highlighting the hardships faced by sugarcane farmers. I did not even get an acknowledgement, let alone an invitation for discussing the issue, he says.

When the powers that be show such apathy towards a problem that affects millions, it is no wonder that India, a sugar-surplus country barely two years ago, is now reduced to importing raw and refined sugar.

Said Prof. Sudhir Panwar: We demand that the term FRP be dropped because this weakens the case of farmers when they approach the courts against sugar mills for better prices because while the SMP was only the minimum price, FRP is construed to be fair and remunerative.

Samir Somaiah expressed apprehension about the impending changes, saying it was doubtful whether these would lead to any long-term solution. The only factors determining the sugarcane price should be the economics of sugar, nothing else. Let the price of sugar decide the price of sugarcane, irrespective of other considerations, he said.