Mumbai: After a 10-day long protest, the Swabhimani Shetkari Sanghtana (SSS), the grouping of sugar cane farmers in Maharashtra that has been at the forefront of a protest seeking higher sugar cane prices from sugar co-operatives, reached a settlement with the latter.

In a meeting with the state’s finance minister Jayant Patil and co-operatives, the farmers agreed to sell their cane for an upfront payment of Rs.25 a kg, with the promise of more to come.

The protest, which held parts of Maharashtra to ransom, saw two deaths (both the casualties were farmers), and the destruction of around 80 buses owned by the state transport corporation.

It also seems to have rattled Nationalist Congress Party (NCP) president Sharad Pawar who, in a meeting last week at Baramati, his pocket borough, pointed out that Raju Shetti, the member of Parliament (MP) from Hatkangale, was a Jain.

Political analysts saw the casteist remark as a ploy to split the Swabhimani Shetkari Sanghtana (SSS), and added that the objective may have been to get Maratha farmers who are part of SSS to stay away from the protests that were led by Shetti.

Pawar and his party have traditionally enjoyed the confidence of both the sugar co-operative and sugar cane farming lobby in Maharashtra and the protest—which took a minor hiatus to accommodate people mourning the death of Shiv Sena leader Balasaheb Thackeray (whose party supports the farmers) before ending on Monday—seems to have got to him.

An NCP spokesman claimed that Pawar’s remark was taken out of context and that he was merely “highlighting the duplicity of Shetti, who was selectively targeting few sugar cooperatives while allowing others to run”.

To be sure, the issue isn’t just political, but also economic.

The farmers wanted more for their cane, specifically, Rs.30 a kg, but sugar co-operatives—most of which are controlled by the Congress and the NCP, allies at the centre and the state—were not willing to pay more than Rs.23.

The demand by the farmers would have changed the way they have sold sugar cane to the mills for years: the mills typically pay a certain amount (say, around Rs.20 or 23 a kg) and add to this once if they manage to get a good price for their sugar cane. The farmers wanted the Rs.30 to be paid upfront, with the remainder (which is likely to be a very small amount) to be paid later.

“These so-called farmers’ organizations are claiming that factories are earning Rs.3,500 per quintal (100kg) of sugar, but during October sugar was sold only at around Rs.3,300 and for the entire preceding year it was sold at an average rate of Rs.2,900 per quintal, so paying Rs.3,000 (per quintal) as a first advance will simply destroy the economics of sugar cooperatives,” said Sanjeev Babar, managing director of the lobby group Maharashtra State Sugar Cooperatives Federation Ltd.

Indeed, sugar is a volatile commodity. In the past year, its international price has ranged between $67.84 per quintal and $48.66 per quintal, (Rs.3,735.94 and Rs.2,799.70). The current price is around Rs.2,800 per quintal ($48.66). It is also a competitive market. India is the world’s second largest producer after Brazil, but it exports very little of its sugar. Nearly 80% of sugar is used domestically and export is also subject to government restrictions.

The farmers said their demand for a substantial upfront payment stemmed from past behaviour of the co-operatives.

Vinay Kore, former minister in the state cabinet, who runs one of the most successful sugar co-operatives in the state admitted that some of the cooperatives are to be blamed.

“Because of mismanagement, nepotism, and outright corruption in some of the sugar co-operatives, their financial condition deteriorated and farmers failed to get their next instalments,” he said. The traditional practice was for farmers to be paid 60-65% upfront and the balance over the next 12-15 months in three or four instalments. Still, it may not be viable for the co-operatives to meet the demand of the farmers, he added.

“They are demanding 80-90% of the total sugar cane price upfront that can put a strain on even financially well-managed sugar cooperatives.”

He spoke to Mint before the settlement with farmers was reached.

The protest put some strain on the NCP. “I don’t think Pawar is rattled, but he is angry because anti-Pawar elements in Western Maharashtra are trying to take advantage of the agitation and tarnish his image,” said Kore.

During the protest, the farm of state cooperation minister, Harshvardhan Patil, at Indapur in Pune district was set on fire.

The Mumbai-Bangalore and Mumbai-Hyderabad highways were blocked at several places by agitating farmers for two days last week.

Chief minister Prithviraj Chavan who met a delegation of protesting farmers on 14 November, appealed to them to call-off the agitation and said the price of sugar cane would be determined after a discussion in the state assembly during the upcoming winter session.

However, that didn’t mollify farmers, although they eventually came around on Monday.

An analyst saw Pawar’s remark about Shetti arising from fears that at least some of the farmers may move away from his party. “He is considered to be leader of farmers yet farmers in his own backyard were turning against the government in which his party is equal partner,” said Anant Dixit, the development editor of Marathi daily Lokmat and political analyst.

Still, it isn’t as if the protest would have eroded Pawar’s base in Western Maharashtra, said Ajit Narde, who is associated with SSS. “I don’t think there is threat immediately to the Nationalist Congress Party’s base in Western Maharashtra but the spreading of an anti-government feeling is definitely a cause of concern for Pawar and he is trying to pre-empt the future danger to his power base by trying to create division in the farmer’s movement.” Narde, too, spoke to Mint before the farmers and the co-operatives reached their settlement.

The average sugar cane farmer in Western Maharashtra is better off than farmers in most parts of the country. And the highly political nature of the sugar business in the state means that they get all the water they need (sugar cane is a water-intensive crop). Out of 206 sugar factories in the state, 164 are in cooperative sector and 60 are private entities.

Sugar cane is the most important crop in Maharashtra. Around three million farmers are engaged in sugar cane farming in the state that contributes around 30% of country’s total production of the crop. During crushing season of 2011-12 (October to March), the state produced 54.5 million tonnes of sugar—around 34% of India’s sugar production.

The sugar cane growing districts of Western Maharashtra include Ahmadnagar, Pune, Satara, Sangli, Sholapur and Kolhapur. Out of 25 ministers in the state cabinet, 11, including chief minister Chavan, hail from Western Maharashtra.

This part of the state is considered a bastion of the NCP, 30 of whose 62 members in the state assembly come from these six districts. Out of the party’s nine MPs, four, including Pawar and his daughter Supriya Sule have been elected from Western Maharashtra.

In 2009, though, the party received a jolt when Shetti won the parliamentary election from the newly-created Hatkangale Lok Sabha constituency spread across Kolhapur and Sangli, by defeating the NCP’s three-time MP Nivedita Mane.