People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 51

December 29,2002

Sugarcane Growers Are Getting Ruined

 N K Shukla

TODAY, sugarcane growers are perforce adopting the path of agitation. This is not only for getting remunerative prices of their cane and for payment of huge arrears pending with sugar mills, but also for getting the cane lifted from their fields which they have to prepare for rabi sowing.

On the other had, sugar mills are refusing to pay the state-advised price (SAP). For years, it has been the practice of the state governments to declare the SAP every year, after the central government declares the statutory minimum price (SMP). Generally, the SAP used to be higher than the SMP by one third because of the local conditions, cost increases, etc. Declaration of the SAP became necessary because the central government deliberately kept the SMP extremely low, without doing proper calculations about the increase in prices of inputs, etc. The central government used to keep the SMP deliberately low, also because it had to pay to the sugar mills for the levy sugar it used to purchase for the public distribution system (PDS).

This year too, on August 5, the central government announced an SMP for the 2002-03 crushing season. It is Rs 64.50 per quintal for a basic recovery rate of 8.5 per cent --- an increase of Rs 2.45 per quintal over last year. Then, a premium of Rs 0.76 per quintal to be given for every 0.1 per cent increase in recovery. The total may thus go up to Rs 73 per quintal. After a prime ministerial announcement hiked the MSP by Rs 5, to 69.50 a quintal, in order to quell the growing peasant discontent if they can (the police firing on agitating cane growers even claimed two lives in Basti district of UP), the total may now reach Rs 78 per quintal. Still this is way below what a peasant should get for his cane.

Be that as it may, following the established convention, this year too the state governments announced their SAPs, adding approximately one third to the SMP. But in same states, millowners have even gone to the court, opposing these SAPs. As for defending the cane growers, the central government is conspicuous by its silence.

Previously, if the mills did not much resist the SAPs, it was because they used to get a good amount from the centre for levy sugar, for the buffer stock of sugar (20 lakh tonnes) and as rent for keeping it in their godowns.

But now, in its hot pursuit of the policy of liberalisation, the centre has almost dismantled the public distribution system. It is now lifting less and less sugar and also dismantling the buffer stock. Moreover, it has allowed unrestricted import of sugar, creating panic and chaos in the sugar industry. Wrong parameters were applied to determine the BPL (below poverty line) and APL (above poverty line) people, leading to exclusion of a majority of the poor and marginal, apart from workers and most of the employees (including the fourth grade employees), from the public distribution system. At the same time, the issue price of sugar was increased. This brought the sugar price in ration shops almost to the level of open market prices.

In this situation, there are only a few to purchase sugar from the PDS shops. Evidently, these are deliberate attempts to weaken and dismantle the PDS.

On August 1 this year, just one month before the beginning of the sugar crushing season, the total closing stock was 156.95 lakh tonnes even after an offtake of 131.12 lakh tonnes for internal consumption (both levy and free market) and 7.06 lakh tonnes for export. This was higher than the closing stock of 144.57 lakh tonnes on this very date last year. Yet import of sugar was allowed from Brazil, Pakistan and other countries. Why?

There remain some other questions also: Why are the regulations on the sugar industry being given up? Why is the 20 lakh tonne buffer stock of sugar being dismantled despite the bad experience of 1978, and of 1994-95? Is it not to help the MNCs even if it harms our indigenous production base and ruins our cane growers?

Another question is: How many times has the government used the 1968 act regarding the payment of arrears, to help the cane growers?

The central government collects Rs 140 per tonne from sugar mills as cess, and out of that it pays Rs 90 towards maintenance of the buffer stock that is operating since 1982. Now, if the centre has collected Rs 3013.23 crore as cess since 1982, will it tell how much it has spent to help the cane growers, how much to maintain the buffer stock, how much to help in modernising the mills, and how much for paying the arrears the mills owe to growers?

The government’s faithfulness to the policy of liberalisation is so great that it is out to close down even the National Institute of Sugarcane and Sugar Technology that was set up in Mau (UP) to help the growers and mills.

On the other hand, if the central government’s intention is to do away with the SAPs, why cannot it itself raises the SMP to above Rs 100 per quintal for this year, create a buffer stock and reorganise the PDS to cover all the vulnerable sections of population? After all, such measures will help all --- the sugar mills, cane growers and consumers. Evidently, the central government, which has shown sufficient will power to help the MNCs, lacks the will to stop the unrestricted imports and help our national economy. This leaves for the growers no option but to fight.