The 2018-19 sugar season for Maharashtra is starting under duress, with many millers expressing their inability to pay the growers. The state is supposed to crush 1,049 lakh tonnes (lt) of cane and produce around 106 lt of sweetener. But the opening stock of 40 lt has disturbed the economics of the sector. Besides, the recent Groundwater Usage Rule, which talks about curtailing the cultivation of cane in deficit areas, has added to the industry’s woes.
Rohit Pawar, who recently took over as the president of the Indian Sugar Mills Association (ISMA) — the industry body of private millers in the country — spoke to the Indian Express about problems plaguing the industry and the way forward. Pawar is the grandnephew of former Union Agriculture Minister Sharad Pawar and had successfully contested the election of Pune Zilla Parishad recently.
How do you see the sugar season shaping up this year? Will it be easy for millers to pay the Fair and Remunerative Price? Financially, the season will be challenging for the industry due to various reason. Cash flow will be a major problem for us. The release mechanism brought in by the government to control the falling price of sugar has created the problem of liquidity within the sector. This will make it difficult for us to pay the growers on time.
Secondly, while the government has announced a battery of measures to help the sector, there remains a value gap between international prices and the valuation of sugar by banks. Millers will have to pay this value upfront to banks to export the sugar. Senior leaders like Ajit Pawar are talking to cooperative banks to see how this problem can be solved but we need a solution for the whole sector. Also, for many mills, storage of sugar will be a problem as they will not have enough godowns to store sugar. Such sugar is not eligible for loans from banks and that will add to our problems.
This will be the second consecutive year when Maharashtra has reported a significant increase in cane area. What is your view on the recent move by the Groundwater Survey and Development Agency, which has formulated rules to make it compulsory for growers to take prior permission in some areas before growing cane? It will be very unethical on part of any agency to try to curtail the cultivation of some crop for farmers without providing them a suitable and financially viable alternative. Most of the crops that have a Minimum Support Price (MSP) fail to realise the same in the markets. Until and unless the government assures 100 per cent procurement of the commodities under MSP, how can it be possible for the government to divert farmers to non-remunerative crops?
As regards the proposed regulations, we are talking to various stakeholders but the farmer is the final decision-maker on what he will grow.
You are taking over as the president of ISMA at a time when the sector is going through a crisis. How do you see the sector evolving in the years to come? What are your priorities? The past presidents of ISMA have worked hard to bring about structural reforms in the sector. One of the major initiatives will be the acceptance of the ethanol policy, which will allow mills to divert from sugar to ethanol. What we need now is to fix the cane payment policy.
At present, the FRP is not linked with prices of sugar and that creates a major problem for us. We need a mechanism to maintain sugar prices without the quota system and it should be linked to FRP or there should be additional buttress for payment of FRP. If that happens, the sugar industry will never face any problem in the future.
You are the grandnephew of Sharad Pawar. How easy or difficult was it for you to enter politics? On the plus side, I have inherited a ready-made thought process and strategy from him. However, the challenge lies in making it relevant for the youth and the changing society. While there have been advantages, the pressure to perform is also there.