Millers market

Maharashtras sugarcane farmers are a worried lot as the State government backs out from the sugar pricing process.

in Sangli & Kolhapur districts

KOLHAPUR and Sangli districts in Maharashtra form the heartland of Indian sugar industry. This time of year is generally the busiest, with itinerant labourers cutting sugarcane and loading it on to tractors that roar off to the more than 20 sugar factories in the two districts. In November and December, factories work at full capacity. Smoking chimneys and air for miles around them scented with a cloying alcoholic sweetness will tell anyone familiar with the industry that sugarcane is being processed.

But this year there is no such activity. The landscape is still. The cane stands uncut in the fields, and there are no smoking chimneys. Labourers who have travelled from other districts in the hope of jobs and wages lie outside their blue, plastic tepees.

A smoke-blackened, battered vessel sits on a wood fire, holding a paltry meal for Ganpat Darges family of five. The family has travelled from Latur district to cut cane. Darge has been coming here regularly in the past decade and is essentially satisfied with the work, but this time he is worried. The cane is not being cut, and hence there are no wages. His wife and three children are on the subsistence diet of a gruel, which is bubbling in the vessel. He expresses his immediate concerns: The longer the cane stands, the lesser the sugar content will be. The government should think of this before they stop us from cutting it.

His observation on the content of sugar in the cane is right, but Darges understanding of the issue is not. The government has not stopped the cutting of cane. It has done something far worse. It has refused to play its annual role in declaring the state administered price, or SAP, that sets the rate the factories should pay farmers for the sugarcane. Some background information will help one understand the history of pricing.

Changes in pricing policy

Earlier, the Centre used to announce a statutory minimum price (SMP) for the purchase of cane by mills. Over and above this, major sugar-producing States were allowed to set their own SAPs. This was usually higher than the SMP. But in 2010, the Centre brought about the Essential Commodities (Amendment and Validation) Bill, which made changes in the pricing policy. The SMP was to be replaced by a fair and remunerative price, or FRP (more on this later in this article). Farmers groups protested against this, and the Centre went back to allowing the States to set an SAP. But confusion had set in and the damage had been done.

This is what Maharashtra has suddenly taken advantage of this year. Arbitrarily and without discussion with farmers representatives or in the State Assembly, the government declared that this year the price would have to be decided between the farmers and the millers.

Farmers and organisations such as the All India Kisan Sabha, the Centre of Indian Trade Unions (CITU), the All India Agricultural Workers Union and the Swabhimani Shetkari Sanghatana protested against the move. To further their cause, four Left and secular parties joined hands in Kolhapur in October to form the Shetkari Sangharsh Samiti, which stood up for the farmers in their struggle. The Samiti was meant to close ranks against the government and ensure that the farmers got a good price for sugarcane.

Farmers protest

On November 9, a large number of farmers gathered in a demonstration in Pune and the police opened fire. There were no casualties, but the leader of the Swabhimani Shetkari Sanghatana, Raju Shetti, a Member of Parliament, was arrested and taken to the Yerawada jail.

Three days later, at a similar protest in Sangli, Chandrakant Nalawade, a farmer, died in police firing and another farmer was injured. The killing sparked a wave of violence, and farmers burnt buses and set up roadblocks. More police action followed, and the State Transport Corporation also punished the agitators by stopping all services in the region for four days. While the police arrested 152 protesters, there has been no reciprocal action for the killing of Nalawade.

Providing an insight into why the government would want to stop declaring the SAP, an official in Kolhapur who did not want to be identified said, The government has supported sugar factories for long. It has given them sureties and they have not repaid loans. So, essentially their own mismanagement has caused the factories to flounder.

More concerned about the factories than the farmers, the government has decided to step out of the picture so that factories can recover themselves by setting whatever prices they like for the purchase of cane. Naturally, factories will set the lowest possible price when farmers are desperate to sell.

Buyers market

In the cane-crushing business it is a buyers market. The SAP was an attempt to even things out and also make it a growers market. The government is aware that this is the way things will move. The same official remarked, The moment the Chief Minister says the farmers should be given their asking price, the factory owners will also jump in and ask for more money. The Chief Minister is no foolhe has thought this through and has found that the best thing is to fall back on sugar decontrol. As a solution the official recommended government intervention and perhaps striking a balance between the private and cooperative approach. If left to market forces, private sugar companies will suck the blood out of farmers.

The issues around sugarcane have always been political rather than agricultural because the majority of those who run the business are politicians. There are about 12 lakh cane growers in the State. As many as 45 per cent of them have small holdings of less than half an acre (one acre is 0.4 hectare), and 50 per cent have up to two and a half acres. About 5 per cent own above that; some of them are sugar barons who own hundreds of acres. Thus, 95 per cent of the cultivators have small holdings but, ironically, their representation in the cooperative power hierarchy is practically non-existent.

On the issue of sugar pricing, it makes no difference to peasant farmers which party is in power. Most Maharashtra cooperatives and mills are either controlled or owned by leaders of the ruling Congress-Nationalist Congress Party (NCP) combine or the Shiv Sena and the Bharatiya Janata Party which are in the opposition. Subhash Jadhav, leader of the Sugarcane Cutters Union and a Kisan Sabha member, succinctly said: Paying remunerative prices is not in their best business interests.

While it is true that the Centreand the Union Ministry of Agriculture headed by NCP leader Sharad Pawarhas been proposing decontrol of sugar, the recommendations of the Rangarajan Committee on sugar decontrol have yet to get parliamentary sanction. Yet, the Congress-NCP government in the State has gone ahead and disassociated itself from pricing. Naturally, this suits sugar factory owners.

In the annual pricing discussions, farmers ultimately got their dues mainly because of government intervention. The States refusal to do so this year has helped private millers and cooperative factories get the upper hand. Farmers have been demanding Rs.3,600 a tonne, with Rs.3,000 of it paid in advance. Instead they are being offered Rs.2,100 to 2,300 a tonne.

Ashok Dhawale, member of the Central Kisan Committee of the All India Kisan Sabha, finds the offer outrageous. In the last one year there has been a huge increase in the price of everything. [The cost of] fertilizer, diesel, pesticides, water, power have all shot up. Rs.2,400 a tonne is the actual cost the farmer bears while cultivating cane. How can they offer him less than his actual costs? This refusal of the government to be involved in pricing is just a bid for privatisation, he asserted.

Reports on sugar issues

The National Commission on Farmers, chaired by Dr M.S. Swaminathan, gave several reports to the government on issues relating to sugar. One of them had to do with pricing (though matters have come to a head only now, pricing has always been a bargaining point between farmers and the mills). The commission recommended that production costs borne by the farmer plus 50 per cent of them should be the price.

For example, in this year farmers spent about Rs.2,400 on production. If the commissions recommendation was to be applied the cane price this year should be Rs.3,600. But, as Umesh Deshmukh, a Kisan Sabha State committee member from Sangli, ruefully says, the final settlement will probably be somewhere around Rs.2,700 a tonne. That is a pitiable profit of Rs.300 a tonne. Mills, on the other hand, make a killing: the price of sugar in the market is high and there are various byproducts such as bagasse and molasses.

The delay in the harvest this year has already meant a loss for farmers. The longer the cane remains standing in fields, the more the fall in the sugar content in the crop. Consequently, the weight of the cane also drops, diminishing the returns for farmers since the sugarcane is sold by weight.

The agricultural cycle has also been affected by this delay. Cane is a 13-month crop. It is planted in June and cut in October the following year. Once a decision is taken to plant cane, a farmer sticks with the crop for a couple of years. Earlier this used to be profitable, but sugarcane is a demanding crop. It needs plenty of water and considerable chemical intervention. This exhausts the soil and a second harvest of cane is now not as profitable as it once was. Deshmukh says, Farmers are forced to use hybrids. They are almost as bad as terminator seeds.

Dhawale says the current protests by farmers are just the beginning of more churning in the sugar industry.

If the peasant farmer who grows cane is to survive, then the report of the Rangarajan Committee on sugar decontrol has to be opposed. The report meant to study the issues of decontrol actually ends up recommending it outright. It is a move that does not bode well for the peasant farmer, the cooperative movement or even the consumer. If the report is accepted, not only will large commercial interests benefit but the existing sugar lobby will also be freed of the financial arrears it still owes individual growers.

Fair and Remunerative Price

In place of the existing SAP, the report proposes FRP. Farmer activists say even the name is inappropriate since there is nothing fair about the remuneration as it will be decided by the mills. The Kisan Sabha says, The right of the State in fixing prices must be safeguarded. It is notable that the fair and remunerative price used by the Central government is a deceptive term and is far below the cost of cultivation in all States. In the name of Rationalisation of Sugar Cane Pricing the committee is pitching for the discredited FRP, which is neither fair nor remunerative. This move is against the interest of the cane growers.

One of the recommendations of the committee is the removal of the cane reservation area. Currently, there is a minimum distance of 15 kilometres between mills. This is in keeping with the spirit of the cooperative movement. Not only are farmers assured of a sale in their own locality but mills are assured of enough cane to crush. A feeling of bonding and community is engendered since the work is seen as a common responsibility. This community feeling, which has so far worked to the advantage of both sides, is sought to be erased by the committee. In the new system it will be one-sided, with the mills having the yes or no on accepting cane from farmers. Farmers also face concerns such as an increase in transportation costs.

Despite Maharashtra still following the norms of a cooperative system, there is no doubt that sugarcane is a crop that benefits the miller more than the grower. If decontrol norms are applied, this divide will become wider. The essence of the issue is to continue with state intervention in the pricing process. This is the only way to ensure that peasant farmers will not become more vulnerable than they already are.