The sugar policy followed by successive governments is intrinsically contradictory and distortionary. Sugarcane, the raw material, continues to be regulated whereas the end product, sugar, has largely been deregulated. The farmer and the mill-owner have a symbiotic relationship. Sure, the farmer should get a remunerative price. But the State Advised Price is fixed without regard to whether the mills have the capacity to absorb the rising cost of the raw material. The industry is also subject to cyclical downturns. When sugar prices are depressed and the inventory piles up, mills end up defaulting on payment to farmers. When the Central government is asked to foot the bill, it has no choice but to increase the taxes.
What is required is a sensible policy which can balance the interests of the canegrower as well as the mills.
The farmers’ demand for increasing the price commensurate with the input cost incurred should be considered sympathetically. The differential pricing of sugarcane — the Centre has fixed it at Rs. 130 a quintal while Karnataka and Maharashtra are offering Rs. 210-230 a quintal — is illogical and unjustified. The fixing of a uniform, fair and remunerative price will only discourage them from cultivating sugarcane in future.
Why cannot the government understand that the same farmer who gets less price for sugarcane is fleeced with Rs. 35-38 for sugar from retail shops. The view that “if agriculture goes wrong then nothing else could go right” should be taken earnestly.
The skyrocketing price of sugar in the retail market puts a big burden on the middle-income group household with limited resources. But then the government must ensure that every farmer gets a reasonable price for his products to keep him engaged in the profession forever.
The Centre is to blame for the sugarcane growers taking to the streets. It should have taken the State governments into confidence while fixing the Statutory Minimum Price of sugarcane as the latter know the pulse of the farmers better. Moreover, India is an agricultural country. Farmers’ welfare must be the top priority. Needless to say, the sugar industry will have no problem of marketing the commodity since its demand is price-inelastic.