The Hindu Business Line : Maharashtra sugar cane farmers — Bitter deal from weather, government

Sugarcane farmers in Maharashtra's Golden Triangle have been dealt a double whammy — by the floods that destroyed much of their crop and by the Government's disregard for their plight. Not only does the Government claim it cannot pay them the SMP, it forbids them from selling where they will get a better price. And while a package for rebuilding co-operatives has been announced, one wonders if there is a provision for the refund of locked-up share-money and dividends to the farmers, who are major stake-holders in the system, says Sharad Joshi.

All bunched up and nowhere to go... Maharashtra sugarcane farmers have got a raw deal.

THE southern part of Maharashtra, comprising the districts of Satara, Sangli and Kolhapur, is endowed with fertile soil and abundant water, and is aptly called the Golden Triangle. The success achieved by farmers in this Golden Triangle in sugarcane production is the envy of their counterparts elsewhere in the country. The pioneering and imaginative cultivators have also made significant strides in the production of table grapes. Though Punjab is supposed to be the most affluent region, agriculturally, Kolhapur district of the `Golden Triangle' records the highest per capita income.

Rich harvests of sugarcane brought in co-operative sugar factories and a whole network of other co-operative institutions, including dairies and banks. In the Quit India movement of 1942, Satara and Sangli districts took the lead and the freedom-fighters of the region managed to create, and maintain for some time, an autonomous government in defiance of British Rule.

The political leadership nurtured at that time managed, after the nationalisation of the Imperial Bank of India, to canalise massive funds released from Delhi in making the cooperative movement a success. The region became the bastion of the Congress Party and of such stalwarts as Yashvantrao Chavan, Vasantdada Patil and Sharad Pawar.

But the Golden Triangle is suddenly in trouble. From the end of July torrential rains have lashed the region and, in spite of the efforts to release waters from the reservoirs of Koyna Dam, the whole area was inundated. In Sangli town, waters even entered the Circuit House, and the roads turned into canals.

The only method of transportation was boats. The rains destroyed the crops and washed away the surface soil, metres deep, from thousands of acres. This rules out any profitable agriculture for some years. The sugarcane crop has been badly affected and the crushing this year may be about 20 lakh tonnes less than last year. As if the nature's havoc was not enough, the Government added its bit to squeeze the devastated farmers. The new crushing season is due to begin after Dussehra, on October 15. The Centre has announced a Statutory Minimum Price (SMP) of Rs 795 per tonne of cane for a sugar recovery of 9 per cent, plus a premium of 88 paise per kg for an additional 0.1 per cent recovery. The modal sugar recovery in the Golden Triangle being 12 per cent, the modal SMP works out to Rs 1,059 per tonne.

In Maharashtra, the co-operative sugar factories take to their charge the cost of harvesting and transport (H&T), which varies from Rs 100 to Rs 350 per tonne of cane.

The State government has worked out an average of Rs 200 per tonne towards the H&T cost. The SMP payable for sugarcane with 12 per cent recovery is Rs 859 per tonne. So far so good.

The SMP, by definition, is the lowest price any purchaser can legally pay without attracting penal provisions. For last several years, the co-operative sugar factories in Maharashtra have been paying a price much lower than the SMP.

The sugar barons had openly taken the position that, given the market conditions, the co-operative factories were unable to pay the SMP.

Unable to pay

The Union Agriculture Minister, Mr Pawar, maintained that the co-operative factories could not possibly pay even the SMP. It is remarkable that most private sugar factories in Maharashtra were able to pay the SMP while the co-operative mills, as a rule, protested their inability to pay.

Ironically, the Minister, known to be the champion of sugarcane producers in Maharashtra, even while pleading inability of the cooperative mills to pay the SMP in Maharashtra, was financing the payment of State Administered Prices (SAPs), which are Rs 150-250 per tonne higher than the SMP, in Uttar Pradesh, Haryana and Punjab. About Rs 600 crore was made available to the UP Government to enable it to pay the full SAP after Mr Rahul Gandhi, the MP from Amethi, raised the issue through a `special mention' in the Lok Sabha.

At least in the year when the districts in the `Golden Triangle were devastated by torrential rains, one would expect the government to at least relax on the price conditions and offer the farmers a State Administered Price higher than the SMP, if not to give massive financial assistance.

Last year, Mr Pawar released Rs 600 crore to enable the co-operative factories in Maharashtra pay what they were obliged to under the law.

This year the average price of sugar recovered is Rs 1,800 per quintal. On the basis of 12 per cent sugar recovery, one tonne of sugarcane produces 1.2 quintals of sugar, which is worth Rs 2,160. Further, molasses and bagasse can fetch at least Rs 210. Thus, one tonne of sugarcane fetches not less than Rs 2,470. The cost of crushing is estimated to be Rs 311 per tonne. Thus, a sugar factory has a net trade margin of some Rs 2,259 per tonne of cane crushed, which is available for payment to the farmers.

This year, Mr Pawar cannot argue that market conditions do not permit the payment of the SMP. Even ignoring the margins made by the co-operative factories, if one goes by the current cost of cane production, it would work out to Rs 1,200-1,500 per tonne. The Maharashtra Government has issued a notification that no factory will pay a price higher than the SMP minus the H&T cost; any breach of this edict will result in loss of licence and penalties.

Further, it has added a note that the first instalment of payment should be uniform, which may result in fixing it as the lowest one among all the factories. When sugar factories in northern Karnataka offered to pay Rs 1,100 a tonne to the cane producers of Maharashtra, the Maharashtra Government moved to stop transport of sugarcane to Karnataka. When harvesting teams from Karnataka moved into Maharashtra they were allegedly repulsed by the police and locals.

Finally, the co-operative barons suggested that the Karnataka factories could take over the closed factories in Maharashtra rather than incur the expenditure of transporting the sugarcane, on the condition that the Karnataka factories joined the cartel and paid the Maharashtra farmers nothing more than the uniform price the Maharashtra co-operatives were going to pay.

In a year of natural disasters, the Maharashtra government, apparently in league with the Union Ministry of Agriculture, is refusing to pay a price higher than the SMP — a common practice in many northern States, even in a normal year. It has moved to stop export of sugarcane to Karnataka. As if this were not enough, the State government has imposed a general ban on jaggery-making, for which Kolahapur district, in particular, is famous.

Rebuilding co-operatives

Recently, the Centre released Rs 525 crore to reduce the burden of interest payments to sugar co-operatives. Further, the Prime Minister, Dr Manmohan Singh, announced Rs 15,000 crore for rebuilding the co-operative organisations. The Maharashtra Government expects to get Rs 3,000 crore on this account.

The co-operative organisations are sinking under the burden of their inefficiency and governmental interference. The farmers too are major stakeholders in the co-op system.

In any scheme for restructuring of co-operative organisations there has to be provision for the refund of the locked-up share-money of the farmers as also amounts due to them towards dividends over the years and refund of amounts deducted under various pretexts, including massive non-refundable (!) deposits.

In 1955, the co-operative barons in Maharashtra managed to `divert' Central resources for their own economical and political advantage. Fifty years later, the co-operatives having failed, yet another attempt is being made to make them a success.

The modus operandi this time seems to be to shed crocodile tears for the farmers and take away funds in their name to enrich the villains primarily responsible for the plight of the former. The `Golden Triangle' lies devastated. One can only imagine the situation elsewhere in Vidarbha and Marathwada, where farmers are committing suicide every day.

(The author is Founder, Shetkari Sanghatana and Member of Parliament (Rajya Sabha). Feedback may be sent to sharad.mah@nic.in)

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