You have to admire the Uttar Pradesh government’s gall. Its policy of forcing sugar mills to buy sugarcane from farmers at uneconomical prices is what has ensured the state has the largest cane arrears in the country, and it is now threatening to file FIRs against millowners who do not pay farmers their dues. Based on the economics of sugar production, as for other agricultural produce, the Commission for Agriculture Costs and Prices (CACP), recommends a Fair and Remunerative Price (FRP) for sugarcane. Each state, however, hikes this to gain political mileage—Uttar Pradesh’s State Advised Price (SAP), however, is the highest in country. Not surprisingly, then, the cane arrears in the state are also the highest in the country. On February 13, 2013, UP’s cane arrears were R5,836 crore versus R1,892 crore in Karnataka and just R386 crore in Maharashtra.

Sadly, it is not only the state government that is guilty. Even the Central government has a big role to play. Some months ago, the Rangarajan committee on sugar decontrol had come out with a roadmap, to get out of the current situation where, by law, the mills have to buy cane only from farmers in their ‘cane area’, they have to buy all the cane, and farmers can’t sell to any other mill. Rangarajan suggested that, for a few years, farmers should be paid only the FRP as soon as they delivered the cane; when the mills processed this and sold this in the market, they would be asked to give more money to the farmers so that, at the aggregate, the farmer got 70% of the value realised by the mills from the cane he produced. After a period of 3-5 years, as farmers would get used to dealing in a free market, Rangarajan said the entire market could be freed up. Since such a move may have upset powerful lobbies who prefer the current system, however, the government failed to act on this and, instead, just freed the mills of their levy sugar—to meet the PDS—obligations. By failing to take the requisite decision, the Centre has left sugar mills—and even farmers—to the whims and fancies of state governments who prefer playing politics to applying economics