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PAYMENT ARREARS TO SUGARCANE FARMERS REACHES 23K CRORE

Context:

Halfway through the marketing season, payment arrears from sugar mills to cane farmers have almost reached Rs. 23,000 crore, leading mills to lobby for the Centre to hike the minimum selling price of sugar.

Relevance:

GS-III: Agriculture (Agricultural Marketing and Pricing and related issues, Food Security)

Dimensions of the Article:

  1. Sugar Industry in India
  2. More about Sugarcane farmers plight of dues
  3. Issues with the Sugarcane Industry
  4. Government Initiative to manage the Sugarcane Industry

Sugar Industry in India

  • India is the world’s largest consumer of sugar.
  • India is the world’s largest producer of sugarcane and second largest producer of sugar after Cuba.
  • Some 50 million farmers and millions of more workers, are involved in sugarcane farming.
  • Sugar industry is broadly distributed over two major areas of production- Uttar Pradesh, Bihar, Haryana and Punjab in the north and Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh in the south.
  • The major sugar producing states are Maharashtra, Uttar Pradesh and Karnataka in India.
  • Uttar Pradesh is the highest sugarcane producing State in the sub-tropical zone.
  • South India has tropical climate which is suitable for higher sucrose content giving higher yield per unit area as compared to north India.
  • Khatauli’s Triveni Sugar Mill is the largest in Asia in terms of scale of production and storage capacity.

More about Sugarcane farmers plight of dues

  • As of February 2021, dues of Rs. 22,900 crores were pending for the cane procured in the current season (October 2020 to February 2021).
  • Data shows that more than half the dues are owed to farmers in Uttar Pradesh. Farmers from the sugarcane belt of western U.P. make up the bulk of protesters at the Ghazipur border site raising the issue of pending sugarcane dues, along with the wider issue of the repeal of the three farm reform laws.
  • The prevailing low ex-mill sugar prices for the last several months, has adversely affected the liquidity of mills and their ability to pay the FRP [Fair and Remunerative Price] to cane farmers.
  • Apart from price hikes, the other way to increase liquidity is reduce surplus stocks through exports.

Issues with the Sugarcane Industry

  • Sugarcane has to compete with several other food and cash crops like cotton, oil seeds, rice, etc. This affects the supply of sugarcane to the mills and the production of sugar also varies from year to year causing fluctuations in prices leading to losses in times of excess production due to low prices.
  • India’s yield per hectare is extremely low as compared to some of the major sugarcane producing countries of the world. For example, India’s yield is only 64.5 tonnes/hectare as compared to 90 tonnes in Java and 121 tonnes in Hawaii.
  • Sugar production is a seasonal industry with a short crushing season varying normally from 4 to 7 months in a year. It causes financial loss and seasonal employment for workers and lack of full utilization of sugar mills.
  • The average rate of recovery of sugar from sugarcane in India is less than ten per cent which is quite low as compared to other major sugar producing countries.
  • High cost of sugarcane, inefficient technology, uneconomic process of production and heavy excise duty result in high cost of manufacturing.

Government Initiative to manage the Sugarcane Industry

Rangarajan committee (2012) was set up to give recommendations on regulation of sugar industry.

The Rangarajan committee recommended:

  1. Abolition of the quantitative controls on export and import of sugar (to be replaced with appropriate tariffs)
  2. No more outright bans on sugar exports and No restrictions on sale of by-products and prices should be market determined.
  3. The central government has prescribed a minimum radial distance of 15 km between any two sugar mills, which needs to be reviewed as this criterion often causes virtual monopoly over a large area can give the mills power over farmers.
  4. Remove the regulations on release of non-levy sugar.

-Source: The Hindu

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