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Wednesday, December 11, 2019

Explained: Why cane growers are protesting in Maharashtra’s sugar belt, again

Here's why the agitation for higher cane prices has become a near-permanent feature during Maharashtra’s crushing season.

Written by Parthasarathi Biswas | Mumbai | Updated: November 24, 2019 12:02:05 pm
express explained, sugarcane growers, fair remunerative price, maharashtra sugar belt, explained news, indian express As per the provisions of the Sugarcane Control Order of 1966, mills have to pay the government-declared Fair and Remunerative Price (FRP) to cane growers within 14 days of cane sale.

Since almost a week, sugarcane growers in Maharashtra have taken to the streets in the sugarcane belt of Sangli and Kolhapur to demand higher cane prices. They have stopped vehicles ferrying harvested cane and even torched a few of them. The Indian Express explains why the agitation for higher cane prices has become a near-permanent feature during Maharashtra’s crushing season.

How is cane price decided?

As per the provisions of the Sugarcane Control Order of 1966, mills have to pay the government-declared Fair and Remunerative Price (FRP) to cane growers within 14 days of cane sale. In case they fail to do so, the sugar commission has the power to auction off the properties of errant mills. Since 2014, Maharashtra has also accepted the Revenue Sharing Formula proposed by the C Rangarajan Committee, which suggests sharing revenues between growers and mills at the end of the crushing season.

According to this formula, 70 per cent of realisations from sale of sugar and its by-products should go to the farmer and 30 per cent should go to the mills to help cover their expenses. In case the amount payable to farmers under the revenue-sharing formula turns out to be lower than the FRP, farmers have to be paid the basic FRP.

Agitation for more payment

In the cane belt of Kolhapur and Sangli, mills and farmers enjoy some advantages which their counterparts in Marathwada or north Maharashtra don’t. Thanks to assured water supply, farmers are more certain of a good crop, with the average per acre yield reported to be around 50-60 tonnes. For mills, higher recovery translates to more sugar being manufactured per tonne of cane crushed. Mills in Kolhapur and Sangli, whose average recovery is around 12.50 per cent (ratio of sugar produced to cane crushed) produce 125 kg of sugar when they crush 1,000 kg (1 tonne) of cane. This is much higher than than the mills in Marathwada, which produce nearly 115 kg of sugar per tonne of cane.

Higher sugar realisation also prompts mills to pay more to the growers, partly to ensure they have more access to cane, and also because mills often end up being the launchpads of local political leaders. Ironically, this has also led to the rise of a farmers’ movement such as the Swabhimani Shetkari Sanghatana, which has taken up the fight for better realisations for cane farmers.

Since 2002, the Sanghatana’s Oosh Parishad (cane conclave), where farmers come together to place their demand for pricing before the millers, has become a highlight of the crushing season. Their demand is always Rs 100-200 higher than the FRP. Once the Oosh Parishad gets over, the Sanghatana and its members hold protests to disrupt the movement of cane to force millers to accept their demands. Sometimes, Sanghatana members also resort to puncturing the tyres of cane-carrying vehicles and torching field offices of mills in the area.

Which factors led to the movement this year?

This year, Sanghatana members have taken to the streets well before the Oosh Parishad, after a meeting between millers and Sanghatana members, held in Kolhapur last Sunday, failed to reach a consensus on payment of FRP.

Millers have maintained that this season, they will be able to pay the FRP in three installments instead of at one go, due to fewer resources and lower capital, but this was rejected by the organisation.

Mills usually ‘pledge’ their sugar stock with banks in advance to avail finances to pay the FRP as well as to raise capital for their operations. The loans are given at the current valuation of sugar, which is Rs 3,100 per quintal at present. Banks give 85 per cent of this as working capital, so per quintal of sugar pledged fetches mills Rs 2,635 as the loan amount. Of this amount, about Rs 700 is used by the mills to cover expenses such as chemicals, gunny bags and salaries, and this leaves Rs 1,935 for FRP payment.

Sale of by-products such as ethanol allows mills to top up their realisations by Rs 200, so that they can pay an FRP of about Rs 2,300 per tonne of cane procured. The average FRP in the cane belt is around Rs 2,850, so it’s difficult for mills to cover the Rs 500 difference.

Also read | Global opportunity: Why large-scale sugar exports is a viable proposition

When the agitation turns political

The agitation in the sugar belt has overtly political implications. Most millers are loyal to the Congress and NCP. Raju Shetti, the chief of the Sanghatana’s political outfit Swabhimani Paksha, had contested against these parties from Hatkanangale Lok Sabha seat twice, and won. In 2019, when Shetti switched sides and teamed up with the Congress and NCP, he was defeated by Shiv Sena’s Dhairyasheel Mane. In the Assembly elections held a few months later, Shetti’s aide Anil Madnaik was defeated by NCP rebel Rajendra Patil Yedravkar, a local miller.

How changing politics affects agitation

As the Sanghatana tries to recover from its political debacle, cane growers are also struggling with the loss of a substantial amount of their crop in the floods which hit Kolhapur and Sangli earlier this year. Facing defection of senior leaders, the Sangathana is also aiming to reinforce its presence in the cane belt through the agitation.

Don’t miss from Explained: In Maharashtra drama, the key legal provision — anti-defection law

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