The Hindu Business Line : States get back power to set cane prices

New Delhi, Nov. 20 The Centre’s decision to scrap the newly introduced Clause 3B of the Sugarcane Control Order, 1966 has reduced the so-called fair and remunerative price (FRP) for cane to a virtual dead letter for sugar mills.

The clause basically exempted mills from paying any cane price above the Centre’s FRP. If any State Government ‘advised’ (fixed) prices higher than the FRP, there was no legal obligation on mills to pay it. The onus for footing the difference, instead, lay with the State Government itself.

But following protests from the Opposition as well as agitating growers, who stormed the national capital by the thousands on Thursday, the Centre has decided to take back the contentious Clause. That would effectively restore the powers of States to fix cane prices and, moreover, enforce these on the mills.

Briefing presspersons here on Friday, the Parliamentary Affairs Minister, Mr P.K. Bansal, confirmed the Centre’s climbdown, which was welcomed by the Opposition. The farmers’ agitation has ended and Parliament would function normally from Monday, said the former Union Agriculture Minister, Mr Ajit Singh, who spearheaded the combined Opposition assault against the clause.

The Clause was inserted consequent to an Ordinance, promulgated on October 21, replacing the existing statutory minimum price (SMP) regime with an FRP. “Once clause 3B goes, the FRP will be nothing but SMP in a different name. While the clause made State Advised Prices (SAP) toothless, it is the FRP that will be rendered toothless now”, a miller noted.

Write-off

The industry has a further reason to be unhappy. The Ordinance has provided for write-off of some Rs 15,000 crore worth of payments due from the Centre on account of past purchases of levy sugar for the public distribution system. These liabilities arose from mills having been paid based on the SMP (rather than the SAP or actual cane price) and the Supreme Court directing the Centre to fork out the arrears on this count.

“We accepted the retrospective write-offs only because of clause 3B promising a bright future. In the end, we have been served a double whammy”, the miller added.