In the backdrop of the Rangarajan Committee recommending deregulation of the sugar sector, farmers’ advocacy body Kisan Jagriti Manch has said the suggestions were “heavily loaded” in the favour of sugar mills.

Manch president Sudhir Panwar observed that the “genuine demand” of farmers for the linkage of cane prices with input price was ignored by the panel.

The panel headed by eminent economist and chairman of the PM’s Economic Advisory Council C Rangarajan today submitted the report to the Prime Minister, who had set up the panel to examine issues related to decontrol of the sugar sector.

The Committee had observed that the sugar sector was the only industry that continued to be controlled by the government and that the mills should free to sell sugar in the open market. Currently, the Centre fixes the quantity of sugar that mills could sell.

The panel also suggested doing away with the levy sugar system, whereby mills have to sell 10 per cent of production to the government at sub-market prices for public distribution system (PDS).

“Rationalisation of sugarcane pricing and liberalisation of sugar trade need to be introduced over a two to three year period in a calibrated and phased manner. However, levy sugar obligation and administrative control on non-levy sugar need to be dispensed with immediately,” the Committee said.

“The proposed two stage sugarcane payment is impractical and disadvantageous to farmers,” Panwar said. He claimed the fair and remunerative price (FRP) that had been recommended as 1st installment of cane price was neither fair nor remunerative due to erroneous calculations of input costs.

“The FRP in last season (2011-12) was Rs 145/quintal (inclusive of input cost plus 50% profit) which was not accepted by any state. The actual price paid by mills in Maharashtra and UP was Rs 100 above FRP and even then the mills earned profit,” he underlined.

The second installment proposed on half monthly reports on sugar prices would delay cane price for at least six months. The weight-age of by products as 5 per cent of sugar value was also erroneous due to progressive nature of these products, he maintained.

Panwar claimed the proposed scheme would not only stagger payment, but expose small farmers to market volatility. “Moreover, in any industry the price of finished product is based on the cost of raw material, but the report envisage fixation of raw material price on finished product.”

However, he welcomed the removal of levy, abolition of monthly release mechanism and stable export-import policies.

Sugar is the largest organised agro-based industry in UP with estimated 4 million farmers engaged in farming. The annual economy of the sector is estimated at almost Rs 30,000 crore in UP with allied industries viz. molasses, bagasse, power (cogeneration) etc supported by sugarcane.