Govt effects a temporary truce in UP's simmering sugar belt

Uttar Pradesh government may have managed to avert, at least temporarily, a major crisis in the state’s sugar belt by getting the private sugar mills to agree to clear the massive cane arrears and the minimum support price of cane as declared by it, but the respite could be short lived as both the farmers and the mill owners insist on a long term solution to the issues that plague the industry.

With at least two farmers committing suicide allegedly owing to failure of the mills to pay the arrears and the farmers in sugar belt continuing to demonstrate for payment of dues in one go, the government is hard pressed to resolve the crisis, especially since the ‘sugar politics’ was entwined with elections and the next Lok Sabha polls are not very far.

It all started with the state government refusing to reduce the minimum support price of the cane from Rs 280 per quintal. The private sugar mills made it clear that they were not in a position to pay the same as it would entail a huge financial loss for them. The mill owners also had several meetings with the senior state officials to resolve the matter but the impasse continued.

UP is country’s second largest sugar producing state and the sugar lobby has influence among all political parties. The mill owners maintain that the present cane rate would make their operations unviable. “There is a need for a long term transparent mechanism of cane pricing…it should be linked with sugar price realisation,” said the UP Sugar Mills Association.

 With the mills refusing to start crushing operations and the government not bending on the cane price, the issue threatened to turn not only into a major law and order problem with the farmers taking to the streets and disrupting normal lives by blocking roads and railway tracks but also a major political issue ahead of the general elections.

The government also hardened its stand and cracked down on the mill owners registering FIRs against them. Police teams were also sent to different places, including Delhi, to nab the mill owners, who had gone underground fearing their arrest even as their association has decried the repressive measures adopted by the state government. The farmers had also staged a demonstration and shouted anti government slogans when chief minister Akhilesh Yadav had formally inaugurated the cane crushing operations at a sugar mill in Meerut district a few days back.

There were reports that some farmers had burnt their cane crops in the fields in Lakhimpur-Kheri district, about 150 km from Patna. Cane commissioner Subhash Chandra Sharma was also held hostage by the agitating farmers in Muzaffarnagar for several hours to register their protest. Over 45 lakh farmers are dependent on sugarcane in the state, according to official figures.

The reported suicide by two farmers in the state allegedly after failure of the sugar mills to pay their dues only worsened the situation. The suicides gave the opposition parties an issue to launch an attack on the Samajwadi Party (SP) regime forcing the latter on the back foot.

Great influence

The sugar mills used to have great influence on the politics in the region earlier. They virtually controlled the pricing of the cane through the heads of the sugar cane societies. In the last few years however, the influence of the mills over the societies has waned to a great extent after the society chiefs themselves entered politics.

There also emerged several associations of farmers like the Bhartiya Kisan Union and some others which took up the cause of the cane farmers and started exerting pressure on the government for a remunerative price for cane. A few political parties like the Rashtriya Lok Dal (RLD), which mainly represented the powerful and dominant jat community also jumped into the fray for political gains.

The SP, BSP, Congress, BJP and the RLD have been engaged in a bitter fight to win the confidence of the cane farmers, who are in a position to influence the outcome of the elections in at least 50 Assembly constituencies. The RLD has already joined the farmers’ agitation on this issue.

“Now virtually all political parties try to appease the cane producers…they always clamour for increasing the cane support price without realising whether the same was viable or not and whether the sugar mills will be able to survive if they paid the price,” said an official. The sugar industry is worth Rs 35,000 crore in the state and lakhs of farmers were directly dependent on the industry.

 When the crisis blew up, the state government announced a package of Rs 879 crore for the sugar mills and also waived purchase tax of two percent on cane besides waiving the entry tax on sugar. The sugar mills also agreed to pay the cane arrears to the farmers in two installments. The government has also decided to constitute a high level committee to go through the issue of linking of sugar price with the cane pricing.

They also agreed to pay the farmers Rs 260 per quintal for the sugar cane within a fortnight of the purchase and the remaining amount after the end of the crushing season.

The sugar mills have resumed operations though reluctantly and insisted on a long term solution of the matter. “The present cane price is unviable…it will have an adverse effect on our financial health,” the millers maintained. Officials say that a crisis could once again crop up if long term measures were not taken.