The Telegraph
Since 1st March, 1999
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Sugar bowl burns in bitter price battle

Lucknow, Nov. 21: Cane growers in the country’s sugar bowl have started burning their crops after mill owners refused to pay them their price.

Mill owners have said they will lift the sugarcane only at the statutory minimum price fixed by the Centre, which is much below last year’s price fixed by the state. The farmers are not ready to sell at this price.

As a result, the crushing of cane — which normally starts in October — has not begun in most of the state’s 51 mills. Only a couple of mills — Modi Sugar Mills and Bajaj Hindustan Ltd — have started operations.

The Mayavati government had adopted a hands-off policy, hoping to avert a collision between the two sides. Now it has come under attack from Mahendra Singh Tikait’s Bharatiya Kisan Union (BKU), which has launched a statewide protest.

Earlier, the Mayavati government had earlier rejected cane growers’ demand for a price hike and fixed this season’s state advised price at Rs 95-100 per quintal, the same as last season.

But the mill owners refused to accept this and even obtained a stay order from Allahabad High Court. “We are ready to start crushing from Thursday in west and central UP and Monday in east UP. But we will do so only if the state government provides us security since we cannot pay beyond the statutory minimum price fixed by the Centre,” said C.B. Patodia, president of the Uttar Pradesh Sugar Mills Association.

The average minimum price payable by factories during the 2002-03 season works out to Rs 75.14 per quintal in west Uttar Pradesh and Rs 71.34 per quintal in central and east Uttar Pradesh. This is way below the prices fixed by the state government for 2001-02 — Rs 100 per quintal on early ripening cane and Rs 95 on common varieties.

Although the state Cabinet, in its meeting on November 12, decided not to increase advised price for the 2002-03 season, mill owners say they are in no position to pay even the previous year’s “advised” rates of Rs 95-100 per quintal.

“Considering the steep decline in open market prices of sugar, we have no option but to pay a lower cane price. We also believe that 80 per cent of farmers in the state are ready to deliver cane at the lower price, provided adequate security arrangements are made,” Patodia argued.

The lower cane price is not acceptable to farmers. Apart from the BKU, the Congress, the Samajwadi Party and a section of Ajit Singh’s Rashtriya Lok Dal have now joined their fight.

The BKU claims that the mills’ argument that they are unable to pay lacks basis. “For every quintal of cane crushed, the mills obtain not only 10 kg of sugar, but also 6 kg of molasses and 4 kg each of baggase and pressmud. Even if the average ex-factory price of sugar has dipped to Rs 12 per kg, mills realise over Rs 130 on every quintal of cane they purchase at Rs 100,” a BKU spokesman said.

“One has to compute revenues from other streams, taking average rates of Rs 100 per quintal each for molasses and baggase and Rs 10 per quintal for pressmud,” he said.

“Even after accounting for conversion and processing costs, the mills would be left with a fair margin, which renders any reduction in cane prices totally unacceptable,” he added.

The Opposition has accused the government of acting in collusion with mill owners. “During the last five years, mill owners have been given tax rebates and concessions worth Rs 2,000 crore per year, but still they have to clear outstandings up to Rs 614 crore to cane growers,” said Congress leader Jagdambika Pal.

In the past, Pal said, successive state governments have resorted to hikes in advised price — it rose from Rs 75-80 per quintal in the 1997-98 season to Rs 95-100 in 1998-99, 1999-2000, 2000-01 and 2001-02. “The Mayavati administration’s decision to ‘freeze’ SAP for the 2002-03 season at last year’s level was itself anti-farmer, but now it does not wish to enforce even this,” he added.

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