New Delhi: The sugarcane farmers of Uttar Pradesh are not pleased about a new state government ‘barter’ policy that requires them to accept 100 kg of sugar/month from mills until June against payment dues for 2019-20. The dues for the 2019-20 season currently stand at Rs 12,000 crore, up from over Rs 7,000 crore in February.
The Yogi Adityanath government in the state claims the decision has been taken in the “best interest” of farmers, but the targeted beneficiaries have termed it “completely unviable”, citing the lockdown to underline worries that the sugar payout will be no help.
Uttar Pradesh leads the country in sugar production. The state’s sugar industry, which is valued at around Rs 40,000 crore, is estimated to provide for more than 50 lakh farmer families.
However, it has also been battling a cash crunch for years, with reports of mill dues to farmers emerging every harvest season. The crisis has been precipitated by depressed sugar prices due to surplus production in two consecutive sugar seasons — 2017-18 and 2018-19 — that have taken a hit on the liquidity situation of mills.
A Rs 40,000 crore industry
Depending upon the variety and sowing time, sugarcane takes about 12 to 18 months to mature. In general, January to March is the period of planting and December to March the harvest season. In some states, sugarcane is grown round the year.
In 2019-20, sugarcane was cultivated on an area of 26.79 lakh hectares, with around 117 sugar mills, private- and government-owned, operating in the current crushing season.
The Sugarcane Control Order 1966 states that sugar mills should pay farmers within 14 days, or face a 15 per cent annual interest on dues.
In light of the dues, the UP cane commissioner issued an order on 18 April that sought to provide some relief to farmers. Under the scheme outlined in the order, each farmer could procure a quintal or 100 kg of sugar/month from mills against their dues for the 2019-20 season.
The value of this sugar, calculated at the minimum sale price of the day, would be adjusted against the balance payment.
The order also states that the sugar will be provided under the sale quota allotted for the month to the mill by the government.
But the farmers will have to lift sugar from the mills by their own means, and also bear the GST. The government, it said, will not give any transport subsidy.
Sugarcane farmers miffed
The order has left the state’s sugarcane farmers fuming. “There are eight people in my house and our monthly sugar consumption is about 25-30 kg. What will I do with so much sugar?” said Avinash Singh, a sugarcane farmer from Piswan, Sitapur, who claimed a mill nearby owed him more than Rs 3 lakh for this season.
“The sugar that the government is offering is in exchange for cash payment that the sugar mills owe us,” he added. “It’s our money, which we earned by farming throughout the year. Where do we go to sell the sugar in this lockdown, where will we get the right price, and who will be ready to buy this from us rather than at shops and sugar mills?”
Singh said farmers were in dire need of cash as they had to pay for transportation and labour dues, as well as purchase other items like fertilisers and sowing inputs.
Chandrapal Yadav, another sugarcane farmer with an 18-acre cane farm in Firozabad, reiterated the concerns.
“Due to the lockdown, there was a sudden cash crunch in my village and nearby areas as there were long queues at cooperative banks. My crop was ready to be harvested but I had to get labour and transport at twice the price. For this, I borrowed money from a lender at 10 per cent interest/month.”
Yadav said he had to manage household expenses, pay off lenders as well as prepare for the new crop season.
“All this has to happen with the money the sugar mills owe me… The government’s offer of a quintal of sugar per month will not even feed my cattle,” he said.
Farmers claim to have suffered another setback in the fact that the central government did not increase the fair and remunerative price (FRP) for sugarcane for the crushing season 2019-20, which started 1 October 2019, over the level fixed last year, Rs 275 per quintal.
The FRP is the minimum price that sugar mills have to pay sugarcane farmers to insulate them from increasing input costs. It is determined on the basis of recommendations given by the Commission for Agricultural Costs and Prices (CACP), an expert body under the Ministry of Agriculture & Farmers’ Welfare, and in consultation with state governments.
To make matters worse, the state government has not increased cane prices for the second consecutive year. The State Advised Price of sugarcane – which mills can choose to pay instead of the FRP – for 2019-20 is set at Rs 325/quintal for the early variety, Rs 315 for the common one and Rs 310 for the unsuitable species (from which it is unviable to extract sugar), the same as in 2018-19.
The Uttar Pradesh government had increased the price of sugarcane by only Rs 10 per quintal in 2017-18.
‘Best interests in mind’
Asked about the farmers’ concerns, Uttar Pradesh Sugarcane Minister Suresh Rana said the decision was taken “keeping in mind the best interest of farmers”.
“As the sugar the farmer gets from the mill will be (calculated at) around Rs 3,000 per quintal, the farmer can sell it for Rs 4,200 to Rs 4,300 a quintal in the market,” he added.
Regarding the remaining dues, he added, “We have already paid Rs 15,000-17,000 crore and will improve it further. Because sugar mills are closed in most states and we are the only ones crushing sugarcane despite the lockdown, we hope for good prices.”
The office of Sanjay R. Bhoosreddy, the cane and sugar commissioner of Uttar Pradesh, who is also principal secretary for the sugar industry & cane development department, said “cane mills across the state are yet to begin the distribution of sugar… and therefore the farmers are upset with the government”.
“However, we will start the distribution soon as our stock for the scheme is almost ready,” an official told ThePrint over the phone.
To questions about concerns regarding transport costs, the office said they “will ensure that the willing farmers who take one quintal of sugar in place of cash payment are provided with the same at their nearest sugar mill so they don’t have to make more expenses on travel and other arrangements”.