Farmers sceptical over millers passing on the gains to them

Sugarcane growers are divided over the impact of the partial decontrol measures announced by the Government on Thursday.

The farmers in the North, especially Uttar Pradesh, are sceptical over the sugar factories passing on the gains to them arising from the removal of the levy system. This is even as total cane arrears across the country in the current sugar year increase to over Rs 10,694 crore, with Uttar Pradesh accounting for over half of it at Rs 5,800 crore, followed by Karnataka and Tamil Nadu.

Cane arrears

However, growers in West and South, mainly in Maharashtra and Karnataka, where co-operatives have a significant presence in the sector, expect the millers to share a pie of the gains with them. The removal of levy is expected to help the industry boost profits and save over Rs 3,000 crore annually. Under the levy system, the sugar mills were forced to sell about a tenth of their produce at a lower than market price to the Government for sales through the public distribution system (PDS).

“We don’t think the scrapping of levy will help the farmers in any way. It will not make any difference to the growers,” said V.M. Singh, Convenor of Rashtriya Kisan Mazdoor Sanghatan. “Instead of providing a bail-out to the millers, the Government could have directly passed on the benefits to the farmers,” said Singh, who had led the farmers’ fight against millers on cane arrears.

Prices may rise

He warned that the removal of controls of the sugar sector would hit the consumers hard as it would lead to rise in prices of the sweetener in the days ahead. Further, Singh predicted cartelisation by millers, especially ahead of the peak festive seasons, in absence of any controls.

Raju Shetty, a farmer leader and Parliamentarian from Hatkanangle in Maharashtra, said the move would partially benefit the growers. “Farmers would have benefited more if all the recommendations of the Rangarajan Committee were implemented by the Government,” he added.

Shetty expects the co-operative mills, which normally share gains with growers, to pass on the benefits arising out of the abolition of levy system. Private millers in the State are expected to follow suit.

Further, Shetty felt that farmers could have benefited more if the recommendations relating to rationalisation of cane pricing, abolition of cane area regulation and minimum distance criteria between two mills were implemented. The State governments are expected to deal with issues.

Abinash Verma, Director-General of the Indian Sugar Mills Association, said the removal of levy and regulated release mechanism would help millers to sell the sweetener in line with the requirement of their cash flows and clear the cane arrears. Currently, the sugar millers are sitting on an inventory of 17.5 million tonnes worth around Rs 51,000 crore, Verma estimates.

Karubur Shanta Kumar, President of the Karnataka Sugarcane Growers Association, expects the millers to share the savings with farmers considering that the area under cane is on a decline due to erratic rains.

“If the millers don’t share the profits then we are ready to fight,” Shanta Kumar said.

Vishwanath.kulkarni@thehindu.co.in

(This article was published on April 5, 2013)
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