People's Democracy

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


No. 27

July 08, 2012


AIKS Demands Realistic Sugarcane Pricing


THROUGH a memorandum submitted on July 3, 2012, to the chairperson of the Commission on Agricultural Costs & Prices (CACP) by its president S Ramachandran Pillai and general secretary K Varadha Rajan, the All India Kisan Sabha (AIKS) has raised the issue of sugarcane prices --- at a time when the (CACP) is having consultations with peasant organisations and state governments on sugarcane pricing for 2013-14. The issue is being discussed at a time when 83 per cent of India is rain deficit and many parts of India are reeling under drought conditions. The AIKS said, “In some states the sugarcane crop is drying due to failure of rains and absence of assured irrigation as well as uninterrupted power supply. The cultivators are also increasingly finding sugarcane production unviable due to low returns. The situation is assuming serious proportions with farmers being pushed to extreme distress and indebtedness. In an unfortunate incident on June 5, 2012, one sugarcane farmer in Tamilnadu committed suicide due to indebtedness.”


In such a context, the AIKS said, the CACP and the government must come up with special steps to incentivise the sugarcane farmers and come up with confidence building measures.  “Production enhancing techniques must be developed to overcome the stagnation in productivity and they must be disseminated to farmers at subsidised rates. Interest-free loans and provision of quality inputs at subsidised rates must be ensured. Unless immediate steps are taken in this direction, sugarcane sowing and consequently overall production will be drastically reduced.”


The AIKS memorandum also said on June 15, 2012, fertiliser companies drastically raised farmgate prices of all non-urea fertilisers, citing depreciation of the rupee and cut in subsidies on different nutrients by the government under the NBS scheme. The MRP of di-ammonium phosphate (DAP), which is the most widely used fertiliser after urea, has gone up from Rs 9,350 per tonne in  April 2010 to Rs 24,000 per tonne now. The price of muriate of potash has risen from Rs 4,455 per tonne to Rs 17,000 per tonne during the same period. These are net figures and do not include the state taxes. Moreover, “Experience from across the country has been that the farmers are forced to pay much higher due to black marketing and artificial scarcity created by unscrupulous traders. Farmers have been paying as high as Rs 26,000 per tonne for DAP even in April 2012.”


In this regard, the AIKS also appended to its memorandum a table comparing non-urea fertiliser prices at present with the prices during the last rabi season. This is given alongside.


Average Retail Price of Non-Urea Fertilisers

(Rupees per Tonne)

Non-Urea Fertiliser

Price in Rabi Season

Price in Kharif Season

Percentage Increase

Di Ammonium Phosphate (DAP)




Muriate of Potash (MOP)




Single Super Phosphate (SSP)




NPK Complex (10:26:26)





On the other hand, the Department of Fertilisers has proposed a hike of another 10 per cent in urea prices. Moves are afoot to cut the subsidies for chemical fertilisers even further, on the pretext of subsidising the bio-fertilisers. Other input prices have also increased substantially. The volatile oil prices and increases in the prices of petrol and diesel are also adding to the burdens on the farmers. The AIKS therefore demanded that the CACP must take note of this extraordinary situation in fertiliser prices as well as fuel prices, apart from the increases in costs of other inputs, while determining the sugarcane prices for 2013-14.


The AIKS had also collected data for the costs of production for sugarcane in Tamilnadu, Andhra Pradesh, Karnataka and Uttar Pradesh (East and West) in 2010-11. The cost of production in Tamilnadu was Rs 189.60 per quintal, in Andhra Pradesh Rs 206.62 per quintal and in Karnataka Rs 204.34 per quintal. In Western Uttar Pradesh it was Rs 245 per quintal and Rs 216 per quintal in Eastern Uttar Pradesh. If the minimum support price (MSP) is calculated on the basis of the Swaminathan Commission recommendations, then at the given costs they would range between the lowest of Rs 284.4 per quintal to the highest of Rs 367.50 per quintal in case Western UP costs are taken into account. This was based on the calculations two years ago. The price fixed by the government on the basis of the CACP recommendations was only Rs 145 per quintal for 2011-12 which does not even meet the costs incurred by the farmer for production. Subsequently, there has been a further increase in cost of production and the AIKS said the prices must be fixed commensurately. The cost calculation from Western Uttar Pradesh for 2012-13 shows that it would cost Rs 317.90 to produce a quintal of sugarcane, including rent and transportation costs. In view of these factors, the AIKS has demanded that the sugarcane price in any case must not be less than Rs 350 per quintal.


In case sugarcane prices cannot be raised according to the costs of production, the AIKS said the government needs to take immediate steps to cut the costs. No steps in this direction are, however, forthcoming. If even production costs are not recovered, there is no reason why farmers should take the risk of cultivation. Sugarcane being a long gestation crop with single cropping in a year, the risk involved for farmers is also greater and this should also be taken note of while fixing the prices. In most states it is taking almost fifteen months from sowing to harvest. Additional incentives in states with low productivity also need to be considered.


The arbitrary fixation of recovery rate, often much below the actual by sugar mills, and complaints of fraudulent weighing of the produce are common. There is no verification of the sugar mills’ claims on the recovery and weighing, and there is no check or monitoring on them. Stringent measures should be taken to curb such practices. The byproducts like molasses, bagasse and press mud, which also bring earning to sugar industry, are not taken into account while fixing the prices. 


The AIKS memorandum also pointed out that the “Sugar Development Fund (SDF) is almost entirely cornered by the industry and its flow is not equitable or beneficial for farmers.  This has to be corrected and a part of it must be set aside to provide production incentives as well as insurance to sugarcane farmers to meet 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 be used to disseminate production enhancing techniques at subsidised rates to farmers.”  




Earlier, through another memorandum submitted to the CACP on June 26 after a meeting of its office bearers, the AIKS had said that “the prolonged drought in many states and the doubts over a normal monsoon makes it all the more necessary that the CACP take a sensitive approach to the issue of crop pricing to incentivise farmers engage in cultivation even under the most difficult circumstances.” The organisation also demanded a contingency plan for the rabi season in the event of below normal rainfall. Interest free loans, subsidised diesel, provision of rent-free pumpsets and tractors through the panchayats to encourage group cultivation and supply of quality inputs at affordable rates must be ensured to deal with any such eventuality.


The AIKS concern about rabi crops pricing was fuelled by the recent announcement of MSP for kharif crops, 2012-13, made by the Cabinet Committee on Economic Affairs (CCEA) on June 15, 2012, which has shocked the farming community. It is being portrayed as the biggest ever hike and many ‘experts’ are suggesting that such a hike will stoke food inflation. They have also claimed that the MSP announced will worsen the food subsidy burden and the government’s procurement costs would soar.


But the AIKS said the government as well as experts have wilfully concealed the fact that input prices underwent massive hikes in prices over the last few years, the last year being no exception to the trend. “None bothered to look at the cost of production for different crops or cross-check with the peasantry the veracity of the government claims that the prices were handsome, fair and remunerative.”


However, “it does not require much common sense to comprehend that the prices announced were neither “fair” nor “remunerative” if one looks at the massive hike in prices of all inputs. The fertiliser companies have further increased prices of all non-urea fertilisers for the current kharif planting season. Even the deflated costs of production that the CACP came up with in 2011-12 in the kharif price policy document brought out by it indicates the increase in costs of cultivation.” Here the AIKS also emphasised that “according to the CACP’s own admission it has arrived at the likely levels of cost of production in different states for 2011-12, on the basis of the cost of production data available for the year 2008-09. This data itself had been much contested by the peasants and peasant organisations at that time. The CACP conveniently seems to have forgotten to upwardly revise these figures while computing the MSP for 2012-13 kharif.”


According to the document, the weighted average cost of production (C2) for paddy in 2011-12 was Rs 887.82 per quintal. This figure is deceptive as it is an average of the costs of production in different States. It ranges from a low of Rs 688.39 per quintal in Uttarakhand to a high of Rs 1482.13 per quintal for Maharashtra. The cost projection by states was much higher and range from a low of Rs 950 per quintal in West Bengal to Rs 1780 per quintal in Maharashtra. Even if one were to uncritically take Rs 887.82 per quintal as the C2, and apply the M S Swaminathan Commission recommendation of C2+50% to compute the MSP, then it must have stood at Rs 1331.73 per quintal in 2011-12. Now after one full year the Government has announced an MSP of Rs 1250 per quintal and Rs 1280 per quintal for paddy for kharif 2012-13. According to the CACP’s own admission, MSP fixed on the basis of weighted average cost of production did not meet even the cost of production in many states in 2011-12.


However, after taking all the relevant factors into account, the AIKS meeting reiterated its our position that unless and until there is a consensus developed through the widest possible consultation on the mode of computing the costs of production and the MSP reflects the increase in costs of production, there is no relevance of this kind of an exercise. It has therefore expressed the hope that the CACP would take immediate steps for rectifying the anomalies and coming up with concrete suggestions rooted in the ground realities.


In this connection, the AIKS memorandum made its own proposals for the rabi 2012-13 crops as against the MSP approved by the government. The comparative figures are given in the table below.

Rabi Crops

MSP Approved For 2011-12 (Rs per quintal)






MSP Proposed by AIKS For


















Lentil (Masur)





























The AIKS also suggested that the price of jute should be fixed at Rs 3000 for common variety and Rs 3500 for superior variety. It also suggested the ways of ensuring procurement at assured prices to provide relief to the distressed jute farmers, urging the CACP to consider these proposals and take the necessary action.