Problems aplenty as glut in international market has brought down prices

The sugar sector in Karnataka is on the boil and myriad reasons are being cited for the present state of affairs, with the government caught in a bind between the owners of the sugar factories and the large number of sugarcane growers spread across 10 districts of the State.

Sources in the State government and some representatives of sugarcane growers told The Hindu that the problem was in the making for months, and has come to the fore now for two specific reasons — the commencement of the sugarcane crushing season and with it the growers seeking a fair and remunerative price; the second being the legislature session being held in Belgaum.

The districts of Belgaum and Bagalkot are described as the sugar granary and with the legislature session in progress in their very area, the sugarcane growers have decided to call the shots until the issue is amicably settled. It is also a case of the Opposition political lobby seeking to settle scores with the governing party and in the bargain enlisting the support of the farm lobby. Karnataka is the third-largest producer of sugar in the country after Uttar Pradesh and Maharashtra, with Tamil Nadu following close behind in the fourth position.

A section of the people connected with the sugar sector said that some of the recommendations of the Rangarajan panel report on the sugar industry have also played a part in the present struggle launched by the growers, particularly the recommendation for decontrol of the sugar sector.

By an order recently, the government had scrapped the levy mechanism (10 per cent of the produce to be made over to the government) apart from the controls over the release of sugar to the market. With the sugarcane growers agitating in the vicinity of the Suvarna Soudha in Belgaum, where the legislature session is in progress, and with one of the growers committing suicide, the government has raised the FRP (fair and remunerative price) by Rs. 150 a tonne (which now adds up to Rs. 2,650 a tonne).

The sugar factory owners have, however, categorically stated that they are not agreeable to paying more than Rs. 2,000 a tonne. In other words, there is no agreement as yet, given the fact that sugar prices are on the decline, from Rs. 3,400 a quintal last year to Rs. 2,600 a quintal at present. The problems for the sugar sector have cropped up largely due to the glut in the international market, leading to falling prices.

Farmers’ representatives, however, argue that the business of the sugar factories is not merely sugar-centric since most of them are into manufacture of ethanol, bagasse for the liquor industry and co-generation of electricity as well. More than anything, the growers are keen that the sugar factories pay them on time (including the dues estimated at nearly Rs. 400 crore) and are also seeking a commitment from the factories that they will abide by the understanding brokered by the government.

While the Union government has fixed the FRP at Rs. 2,100 a tonne, the State government has fixed it at Rs. 2,650. There is no clarity yet on whether the sugar factories will cough up the additional amount.

The President of the State unit of the Farmers’ Federation of India, C. Narasimhappa, told The Hindu that “we are totally opposed to the implementation of the Rangarajan panel report. Decontrol of the sugar sector will be dictated by the private sugar industry lobby and towards this end, the government has to step in and strictly regulate the sugar pricing. There are 59 sugar factories in Karnataka and a majority of them (45) are in the cooperative sector”.

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