People's Democracy

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


No. 30

July 24, 2011


AIKS Demands Rs 300 Per Quintal Cane Price


IN a statement issued from New Delhi on July 20, the All India Kisan Sabha (AIKS) has taken exception to the way the government is trying to fix the minimum support price (MSP) of sugarcane for the coming season.


One may note that the Commission for Agricultural Costs and Prices (CACP) had had a consultation on July 19 with peasant organisations and state governments on sugarcane pricing; and that AIKS finance secretary Noorul Huda and joint secretary Vijoo Krishnan attended the meeting on behalf of their organisation. The AIKS representatives pointed out that the consultation was being held at a time when cane growers are finding sugarcane cultivation increasingly unviable due to its low prices. Despite such a scenario the government has systematically tried to propagate a myth that it is providing “fair and remunerative” prices to the growers. On July 17, the finance minister had attributed the skyrocketing inflation to “high procurement prices,” but the AIKS refuted this contention and argued that the CACP must fix the sugarcane price for 2012-13 after considering some vital factors that are as below.


1) Ever since the decontrol of fertiliser prices under the Nutrient Based Subsidy (NBS) regime, the prices of DAP, MoP and other fertilisers as well as of urea, which has been partially decontrolled, have been increasing. Fertiliser firms have been given free hand to fix the prices. The Department of Fertilisers issued a notification on May 5, 2011, stating that the “companies have the freedom to increase the maximum retail price (MRP) of DAP by Rs 600 per tonne in addition to the MRP prevailing at present (Rs 10,750 per tonne)” and also a proportionate increase in the MRP of complex fertilisers (corresponding to that in DAP) would be “admissible.” But this “admissible” MRP would translate into Rs 11,470 per tonne for DAP. Now through a fresh notification on July 8, 2011, the department has rescinded the notification of May 5, 2011, and stated that the market price of non-urea fertilisers “will be open.” The MRP of DAP inclusive of VAT, if calculated on the basis of the imported cost of DAP at 650 dollars per tonne, will translate into around Rs 14,300 per tonne. This is an exorbitant increase of Rs 3550 per tonne of DAP within the last two months. Other input prices have also increased substantially. The volatile oil prices and increase in the prices of petrol and diesel are also an added burden on the farmers. The AIKS said the CACP would have to take note of this extraordinary situation in fertiliser prices as well as fuel prices, apart from the increase in the costs of other inputs while determining the sugar MSP.


2) The Directorate of Economics and Statistics (DES) had submitted Rs 68.81per quintal as the cost of production (C2) in 2004-05 and Rs 79 per quintal in 2010-11, which means a meagre increase of Rs 10 only over the last six years. However, according to an estimate, the harvesting cost alone has increased by Rs 20 per quintal in the intervening period as labour costs have increased. The DES figures show the seed cost as Rs 5022.54 per hectare only whereas the seed costs range between Rs 12350 and 19760 per hectare across different states. The DES seems to have conveniently missed the exorbitant increase in the fertiliser, irrigation and diesel costs too.


3) The AIKS had collected the costs of production for sugarcane in Tamilnadu, Andhra Pradesh, Karnataka and Uttar Pradesh (east and west) in 2010-11. If the MSP is calculated on the basis of the Swaminathan commission recommendations, then at the given costs they would range between a low of Rs 284.4 per quintal to a high of Rs 367.50 per quintal if Western UP. This was based on calculation a year ago. Subsequently, there has been a further increase in the cost of production and hence the cane prices must be fixed commensurately. The AIKS also pointed out that sugarcane is a long gestation crop with single cropping in a year, and the risk involved for the cane growers is also greater, which should also be taken note of while fixing the prices. Additional incentives in states with low productivity also need to be considered. The AIKS has therefore demanded that the sugarcane price must not be below Rs 300 per quintal.


4) The AIKS also pointed out that sugar mills are arbitrarily fixing the recovery rate, often at much below the actual; often there are also complaints of fraudulent weighing of the produce. The sugar mill’s word is taken as final on the matter of recovery as well as weighing and there is no cross-check on them. Stringent measures must be taken to curb such practices. Byproducts like molasses, bagasse and press mud, which also bring earning to the sugar industry, are not taken into account while fixing the prices. 


5) The Sugar Development Fund (SDF) is almost entirely cornered by the industry and its flow is not equitable or beneficial for the farmers. This has to be corrected and a part of it must be set aside to provide production incentives as well as insurance to the sugarcane growers to compensate for the crop losses arising out of pests, natural calamities and accidents. Provision of cheap credit to small and marginal farmers through this fund must also be explored. The SDF must also be used to disseminate production enhancing techniques at subsidised rates among the farmers.


6) The government is pushing for decontrol of sugar to aid the sugar lobby and big corporates who also are defaulters in terms of huge arrears that need to be paid to the cane growers. The AIKS says it is opposed to any proposal to decontrol sugar and urged upon the CACP to recommend such prices as may provide adequate incentive to the farmers to cultivate sugarcane.