Maharashtra’s ongoing cane agitation is less about prices and more about breakdown of trust between mills and growers.

Sugarcane and milk farmers are on a warpath today in different parts of India. In Maharashtra’s Satara-Sangli-Kolhapur belt, the agitation by cane growers demanding a first instalment price of Rs 3,000 a quintal – as against the Rs 2,200-2,500 final rate they got last year – has led to even police opening fire on irate mobs. Milk producers haven’t reacted as violently, but are getting restive about dairies either not buying or reducing procurement prices anywhere from Rs 2.50 in Karnataka to Rs 5 a litre in the North over the past few weeks. While the proximate cause of the above tensions may be prices, what they highlight equally is a breakdown of trust, such as there was, between farm produce suppliers and processors, which holds particular importance in the context of the sugar and dairy industries.

Sugarcane and milk, unlike wheat or cotton, are perishable commodities that cannot be bought from mandis, for stocking up when prices are low and processing for sale only when realisations go up. They are also products with long gestation periods. The plant cane sown today is harvestable only after 10-11 months. Likewise, a young buffalo heifer takes 45-odd months to calve and start giving milk. If a sugar mill defaults on cane payments, growers would switch over to other crops. In the event, the factory will go without cane for an extra 10-11 months, compromising its viability. The same goes for milk, where higher prices received in recent years have induced farmers to invest in new animals and rear calves. These have now begun yielding plenty of milk, resulting in the current glut-like situation and crash in prices. If it persists too long, the same farmers may prefer sending their buffaloes to the slaughter house, rather than milking them or raising more heifers. That would, then, impact future milk availability and prices to the detriment of dairies and consumers alike.

All this only emphasises the relation of trust between producers and processors, which is clearly missing today in Maharashtra, despite most sugar mills being cooperatives ostensibly owned by growers themselves. While the cooperative structure is theoretically more amenable for reconciling the seemingly contradictory goals of the two sets of stakeholders – one wanting higher and the other seeking lower price for farm produce – what we see now is rising confrontation spilling over into violence. The point is not whether a cane price of Rs 3,000 a quintal is high or reasonable. It is the virtual collapse of institutional arrangements for negotiations – giving just the excuse for governments and rabble-rousers to intervene in matters that are for the mills and the growers to directly sort out – which is most disturbing. Just as mills and dairies cannot do without cane or milk, for farmers too, the viability of these industries is in their own interest. Communicating this simple message shouldn’t be difficult.

(This article was published on November 15, 2012)
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