The Hindu Business Line : Cane war fallout: UP mills doling out `in-kind' sops to growers

ALL major mills in Uttar Pradesh, particularly in the western parts where the corporate war for cane is most intense, are today doling out various in-kind inducements to their growers.

Take Mr Shishir Bajaj's Bajaj Hindusthan Ltd (BHL), for instance, which began some time in mid-January by holding daily mill-gate lotteries for farmers in its newly-commissioned factory at Kinnouni, Meerut. Winners at the draw received tiffins, fancy glass tumblers and assorted utensils.

But since mid-February, utensils have given way to more `productive' allurements, directly linked to cane supplies. For every 100 quintals of cane they deliver, farmers are now being given three bags (of 50 kg each) of di-ammonium phosphate (DAP) free of cost.

BHL is also providing growers an alternative of supplying 15 quintals of cane, for which they would be entitled to 20 kg of DAP.

A minor variant of BHL's scheme is the one devised by Mr Siddharth Shriram's Siel Sugar Ltd. The company's two units at Mawana (Meerut) and Titawi (Muzaffarnagar) are giving farmers the choice of taking home five kg of sugar for every 15 quintals of cane they deliver or collect a full 15 kg tin of vanaspati for every 100 quintals of cane.

Not to be left behind are Mr V.K. Goel's Dhampur Sugar Mills Ltd and Mr Tilak Dhar's DCM Shriram Industries. The former's Mansurpur (Muzaffarnagar) mill is giving one bag of urea for every 20 quintals of cane, while the latter's Daurala plant at Meerut is providing 20 kg of DAP for every 15 quintals.

Similar free fertiliser schemes are also currently operational in Mr G.S. Mann's Simbhaoli Sugar Mills at Ghaziabad, Mr Dhruv Sahwney's factories at Khatauli (Muzaffarnagar) and Deoband (Saharanpur) and Mr U.K. Modi's Malakpur (Baghpat) unit.

Some mills are even giving farmers the option of collecting payments separately in cash at the rate of Rs 13 per quintal in lieu of supplying free DAP or urea.

Mr S. Prakash's Daya Sugar at Gagalheri (Saharanpur), on the other hand, is paying as much as Rs 23 per quintal in cash to farmers, translating into a full cane price of Rs 135 per quintal. Viewed against the last season's average price of Rs 90 per quintal, it means an effective increase of about 40 per cent in cane prices, largely offset though by higher ex-factory realisations on sugar and molasses.

Sugar mills in Uttar Pradesh may have officially stopped paying growers `special incentive' rates for cane, over and above the Rs 107-112 per quintal price as `advised' by the State Government for the ongoing 2004-05 crushing season (October-September).

But what is not being done officially, ostensibly in the industry's `larger interests', is still taking place through indirect sops given to growers, similar to the various production-decoupled payments made to rich-country farmers under the World Trade Organisation's (WTO) Blue Box and Green Box provisions.

The difference though is that the tab would have to be picked up by the mills themselves and not the Government.

Significantly, all these sweeteners to growers are being doled out only in the main cane-growing districts of western Uttar Pradesh. There is no such scramble for sourcing cane in the eastern or central parts, where there is less scope for multiple players, giving companies such as Balrampur Chini, BHL and the KK Birla Group a virtual monopoly in their respective `reserved' areas.

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