Growers, mills must fight Centre together

Kolhapur: The simmering discontent over sugarcane prices across India's sugar-producing belt is threatening to take a violent turn. With protests escalating in Maharashtra and Karnataka, sugarcane growers have taken to the streets, set cane-laden tractor trolleys on fire and blocked national highways.

Their demand for remunerative prices is legitimate. But the direction their agitation has taken raises a fundamental question: are farmers and sugar mills going to fight each other, hold ordinary citizens to ransom, or unite to confront the Union government over the structural crisis confronting the sugar industry?

The absence of a remunerative floor price for sugar has left sugar mills financially constrained, making it increasingly difficult for them to pay growers the prices they expect. With cane production costs rising and returns failing to keep pace, a confrontation during the current crushing season was hardly unexpected.

Shared Crisis
Yet, the real battle was never supposed to be between sugarcane growers and mill owners. Both were victims of the same distorted economic framework. There was an understanding, at least initially, that farmers and millers would join hands and put collective pressure on the Centre to address the industry's fundamental problems.

That was the right strategy, one that identified the real source of the crisis. Unfortunately, the agitation has gradually drifted away from this objective. Instead of confronting the policies that have pushed the industry into a financial corner, growers have once again turned against sugar mills and the public infrastructure. Their agitation is justified, but its direction is misplaced.

Maharashtra and Karnataka, India's two major sugar-producing states, are witnessing the sharpest expressions of this discontent. Uttar Pradesh, another major producer, presents a different political context.

With Assembly elections approaching, the state government has greater political incentive to keep sugarcane growers satisfied, even if it means stepping in to facilitate better prices. Maharashtra and Karnataka, however, have witnessed mounting tensions, with protests disrupting crushing operations and public transport.

The initial phase of the agitation had offered a more promising direction. Sugarcane growers' organisations from both states, along with Swabhimani Shetkari Sanghatana leader Raju Shetti, staged a sit-in outside the Hubballi residence of Union Food Minister Pralhad Joshi.

This was a politically significant intervention. It sought to direct the farmers' anger towards the policymaking establishment responsible for the industry's economic constraints. The logical next step should have been to widen the agitation and build sustained pressure in Delhi.

Misplaced Focus
Instead, the second phase saw the focus shift to the commencement of crushing operations and disputes over payments by individual sugar mills. The agitation has now returned to its traditional targets factories, roads and public transport.

The initial demand was for a cane price of Rs 5,500 per tonne. Protesters have since indicated a willingness to negotiate, with a first instalment of around Rs 4,500 per tonne. But the financial position of sugar mills, particularly in Maharashtra and Karnataka, cannot be ignored.

Over the past few years, several mills in these states have paid growers substantially above the Fair and Remunerative Price (FRP). While this helped sustain farmers' expectations, it also added to the debt burden of the mills. With the Centre restricting the industry's pricing and marketing flexibility, mills are finding it increasingly difficult to sustain such payments.

In the cooperative sugar sector, barring privately owned enterprises, growers are not merely suppliers of raw material; they are also the owners of the factories. Their interests, therefore, are intrinsically linked. Farmers need remunerative returns, but the financial health of the mills that process their cane is equally critical. An economically weakened cooperative mill cannot indefinitely sustain higher cane prices.

This is precisely why farmers and mill managements need to recognise their shared interests. Instead of allowing the dispute to degenerate into a confrontation between the two, they must build a united platform and demand policy corrections from the Centre. A viable floor price for sugar and remunerative pricing for ethanol could fundamentally alter the economics of the industry and restore financial stability to mills.

The Centre's reluctance to raise the minimum selling price of sugar is largely driven by its determination to contain food inflation. Meanwhile, political opposition and controversy surrounding ethanol use have also constrained the industry's ability to expand a potentially remunerative avenue for value addition.

At the same time, duty-free sugar imports continue, while export opportunities remain restricted. This combination of policy decisions has left domestic producers with limited pricing flexibility and few avenues to improve their earnings.

There is, however, another dimension to this policy imbalance. While ordinary consumers are expected to benefit from relatively low sugar prices, large corporate buyers are among the biggest beneficiaries of the existing pricing regime.

Industrial and corporate consumers account for more than 65 per cent of the country's sugar consumption. They procure sugar at relatively low prices and, in turn, use it in products that generate substantial commercial margins.

Policy Remedy
A dual-pricing mechanism for sugar, under which industrial and bulk consumers pay a different price from retail consumers, could provide the industry with much-needed financial relief without imposing the entire burden on ordinary households. Such a policy intervention deserves serious consideration. It could help improve mill realisations and strengthen their capacity to pay growers better prices.

But none of these structural corrections will materialise through confrontations between farmers and factories. Nor will blocking national highways, disrupting public transport and inconveniencing ordinary citizens strengthen the growers' case. Such tactics risk alienating public support while allowing the real policy questions to escape scrutiny.

The sugarcane growers' fight is legitimate. Their demand for a fair return on their produce cannot be dismissed. But the question is whether they are prepared to identify the real source of the crisis. Farmers and sugar mills are on the same side of the economic divide.

Their fight should be against the policies that have brought the industry to this impasse, not against each other. The road to a remunerative cane price runs through Delhi, not through blocked highways and factory gates.