Centre's Rs 7ooo cr package not a sweet deal for sugarcane farmers

sugar-cane-sugar-mill-reuters [File] A trader speaks on his mobile phone as he waits for customers at a sugarcane wholesale market in Kolkata | Reuters

Last week the Union cabinet gave nod to a Rs 7,000 crore package for sugarmills, to clear the arrears of cane farmers. The dues to cane farmers had surpassed Rs 22,000 crore at the time of government decision.

Uttar Pradesh, the highest sugarcane producing state, have more than Rs 12,000 crore in dues to be paid to the farmers.

Farmers' organisations now say that the Narendra Modi government's package has done too little to bring the farmers out of the perpetual debt triggered by a crisis of payment.

"The crisis of payment is carrying on year after year irrespective of sugar prices being high or low," said V.M. Singh, convener, Rashtriya Kisan Mazdoor Sangathan (RKMS).

"This is due to the fact that the statutory penal clause of payment of interest at 15 per cent per annum for delay in payment beyond 15 days is not invoked by the states," Singh added.

In Uttar Pradesh, RKMS won a petition at the Allahabad High Court, that directed sugar mills to pay their penalties on dues to sugarcane farmers.

However, the Uttar Pradesh government cabinet led by Yogi Adityanath, announced amendments to state laws, allowing mills a waiver on their due penalties.

Sugar mills last year had reported a poor financial position, owing to a glut in sugar output and depressed global prices of the sweetener. The state cabinet orders considered that, cheering bourses and mill owners.

In March last year in another petition moved by RKMS, the Allahabad High Court, quashed the state cabinet decisions to waive-off penalties of sugar mills.

“The court was of the view that if the farmers have paid interest or even penalties, on delayed payment of the loans taken by them to grow sugarcane, then the farmers are also entitled to the interest and the same cannot be waived by the state government,” said Singh, quoting the court order.

However, the Yogi Adityanath government has not shown much interest in the High Court order.

The court had directed that the decision be taken within 4 months but the state government has not done anything in last 15 months.

Ultimately, RKMS is now forced to pursue a contempt petition against the UP Cane Commissioner.

This time too, when the Centre announced a package to clear nearly one-third of their dues, the mill owners were happy but it was sure that they will still not be able to clear the cane farmer's dues.

The Indian Sugar Mills Association (ISMA), a conglomerate of private sugar mills, welcomed the Union cabinet decision to a minimum ex-mill sale price of sugar at Rs 29 per Kg.

“This will improve ex-mill prices from the current levels of around Rs 28 per Kg but may not impact the retail prices in any significant way,” an ISMA statement said after the cabinet decision.

“The other step of providing subsidised loans for ethanol production capacity is an excellent move,” said Abinash Verma, director general, ISMA and former bureaucrat in the food ministry.

However, he said that the ex-mill sugar price of Rs 29 would still not be enough after considering a fair and remunerative price of Rs 290 per quintal of cane to farmers, cost of the white sweetener comes to about Rs 35 for mills.

“It will, therefore, be a challenge to expect the sugar industry to clear the huge cane price arrears on this basis,” Verma said, averaging a 10.8 per cent recovery from cane in all growing states.

Sugar mills, however, when confronted about profits in their books by courts, were told that citing low recovery could not be a condition to not pay farmer dues. This is because, mills also benefit hugely from many other by-products of sugar making, the Allahabad High Court had observed.

With the Supreme Court upholding the Allahabad High Court order, RKMS feels that sugarmills are now bound to pay interest on cane dues to farmers in previous cane years of 2012-13, 2013-14, 2014-15 and 2015-16.

“Interest is bound to be paid by mills as the farmers who are committing suicides have paid interest and penalties on the loans they had taken for raising their cane,” said Singh of RKMS.

However, it would be yet another matter to make states and mill owners comply with the court order.

RKMS suggests that the sugarcane farmers will get justice once the interest at 15 per cent is paid without being waived-off at the whims and fancies of governments or bureaucrats.

“Until the statutory provision to pay interest on delayed payment is invoked and upheld by the states and centre, the payment crisis of farmers will continue till eternity,” said Singh, a veteran farmer rights activist.