Sugar decontrol: State cooperatives concerned over two-stage payment

Say the mechanism recommended by Rangarajan Committee may hurt sugarcane farmers' interests

There seems not many takers in Gujarat for the recommendations of sugar decontrol by the Rangarajan Committee. Most of the sugar cooperatives in Gujarat have rejected the idea of two-staged payment mechanism stating that it would hamper farmers’ interests.

“Decontrol of sugar sector is a welcome suggestion, but there are some concerns about some of the recommendations, which may be unviable and harm farmers’ interests. The two-staged payment mechanism to cane farmers does not cover the input cost aspect and hence, it shows miscalculation on that part,” said Mansinh Patel, president, Federation of Gujarat State Cooperative Sugar Factories (FGSCSF).

The Rangarajan Committee, in its report submitted to the Prime Minister on Friday, had suggested that ‘the actual payment of cane dues to farmers would happen in two stages - first upfront when the FRP (fair and remunerative price) is paid and the second after six months, when the ratio is calculated.’

This would mean that FRP will be a guaranteed price, whereas after the six months, the realized value from the sale would be calculated and anything over and above the FRP, would be paid to the farmer.

The committee has also suggested to drop the levy obligation on the sugar mills. Currently, about 10 per cent of the mill’s total production has to be sold at government-set price, to supply under the public distribution system (PDS).

However, the sugar cooperatives in Gujarat have welcomed the recommendations on stabilising export-import of sugar.

“There was a need to stabilize export-import of sugar as it directly affects domestic demand and prices. Now, farmers can hope for better prices,” said an official at Madhi Sugar Cooperative Society in South Gujarat.

According to him, the state sugar cooperative societies already pay much more than the FRP.

“Earlier, farmers' realisation used to be around Rs 1,900 to Rs 2,200 per tonne of sugarcane, which has increased to around Rs 2,400 to Rs 2,500 per tonne given last year. We are already paying higher than the FRP,” said Dilip Bhatka, chairman, Madhi Sugar Cooperative Society.

Last month, the FGSCSF had announced the procurement prices of sugarcane per tonne. Most of the sugar factories have announced the procurement prices in the range of Rs 2,000 per tonne to Rs 2,900 per tonne.

The state, where 100 per cent sugar production comes from cooperative sector, contributes seven per cent to the country’s total sugar production. There are about 17 sugar cooperative factories with annual sugarcane crushing of over 12 million tonnes.