Politics cripples sugar mills

VIOLENT protests have broken out over sugarcane prices in western Maharashtra. Neither the protesters, who demand a price of Rs 3,000 a tonne nor the sugar mills, which offer just Rs 2,300 are in a mood to relent. The state government has washed its hands off the matter, telling the two parties that whatever price they decide would be acceptable to it.

Fixing the price is a bit complicated. First, the Centre announces a fair and remunerative price (FRP), which is Rs 1,750. State governments add a bonus in the form of a state advised price (SAP). Sugar mills are free to pay any price above the FRP and the SAP combined.

There is politics behind the standoff. The sugar mills are patronised by Union Agriculture Minister Sharad Pawar of the Nationalist Congress Party. The sugarcane growers’ protests are led by an MP from the area, Raju Shetty, who was arrested after the agitation turned violent. India Against Corruption activists Anna Hazare and Arvind Kejriwal have also lent their support to the farmers. Raju Shetty is trying to erode the political base of Pawar ahead of the 2014 elections. Congress Chief Minister Prithviraj Chavan is watching from the sidelines, though he can be faulted for using excessive force in enforcing law and order in the area. Farmers have indulged in arson, burning many government and private vehicles, and blocking roads to stop the supplies of milk and other necessities to Mumbai.

Maharashtra is the leading producer of sugar with sales touching Rs 25,000 crore a year. There are 200 registered sugar mills of which 165 are in the cooperative sector. Forty per cent of the mills were declared sick in 2011. Political interference has turned the mills inefficient, brought in non-professional managements and resulted in over-staffing. The successive chief ministers have handed out liberal subsidies to the mills and sugarcane growers. Farmers hope this time too the Chief Minister would come to their rescue and they would have their way.