Anti-farmer and anti-people policy

When on 19 Nov 2009, more than 30,000 sugarcane farmers from Uttar Pradesh and other parts of India came to Delhi to protest against the proposed sugar ordinance which would lead to reduction in sugarcane procurement price, the UPA government was forced to agree to amend the ordinance.

The ordinance issued by the Central government on 21 Oct 2009 said: “if any state government fixes any price above the fair and remunerative price (FRP) fixed by the Centre, such state will pay the difference amount to the sugarcane growers.” So the sugar mill owners would pay only FRP to sugar cane growers. State governments which traditionally announce a higher procurement price then the center, would now have to cough up the money from the bankrupt state exchequers, which would effectively mean that the sugarcane farmers would have to take a cut in their sale price. Uptil now, the sugar mill owners were responsible for paying the farmers the procurement price fixed by the state governments.

The Central government has announced a meager FRP of Rs 129.85/quintal when sugar price has soared to Rs. 4000/quintal. UP government announced SAP of Rs. 165/quintal. Sugarcane growers are on the other hand demanding purchase price of Rs. 280/quintal for their produce, in line with sugar price prevailing now in market.

Sugar mill owners have been demanding removal of all controls on sugar which means they should not be required to supply 20 percent of production (levy quota) for distribution through PDS at a price fixed by government nor should there be any restrictions on how much sugar is supplied or not supplied in free market. They thus want full freedom to determine production and prices to maximize their profit. They have also been demanding higher price for sugar supplied to the government and have recently got a judgment in their favour from Supreme Court which requires the central government to pay Rs. 14,000 crore to sugar mill owners as arrears since 1976. This is supposed to be the compensation for sugarcane price, higher than SMP paid by sugar mills for producing levy quota of sugar.

The central government has been misleading the people by claiming that the steps taken by it were for controlling the sugar price. Working people in town and country must not accept this propaganda. This propaganda is aimed at dividing the workers and peasants, blaming the sugarcane farmers for the high price of sugar, while the central government, the state governments, as well as the capitalists involved in production and trade of sugar escape any blame for the terrible plight of the people.

Shooting prices of Sugar

The working people have been bearing the brunt of sharply rising sugar prices, which has hit a high of Rs.45/kg by mid-November 2009, a doubling of prices over the previous year.

The explanation for this lies in the trade policy of the government which is clearly in the interests of the big corporate sugar producers and traders. Throughout 2006 and 2007, when sugar production in the country exceeded demand, the government was enabling these corporate interests to export sugar. The exporters benefited from high sugar prices in the world market in 2006 and from government subsidy in 2007 when world sugar prices fell. However, in the face of bumper production, the sugar companies had not settled dues of the sugarcane farmers. This combined with a drop in cane procurement prices lead to a fall in cane acreage in 2007. By February 2008, the impending shortfall in production was clearly anticipated by analysts and the government cannot plead ignorance of this fact.

Instead of taking measures to create adequate stocks of sugar and keep its prices under control, the government continued to enable export of sugar of 3.3 million tonnes beyond this point of time and even continued to actually subsidise this export till September 2008. Then in early 2009, India began importing sugar, at a time when the prices in the world market had already shot up with speculators laughing all the way to the bank in the knowledge that India may have to import even larger quantities of sugar. 

Sugar mills, controlled by a few large companies and a number of political leaders are ensuring that the shortage prevails so that they can make windfall profits. The Indian Sugar Millowners’ Association, the lobbying organization of capitalists owning sugar mills, has been opposing any duty-free import of refined sugar. It has also demanded that levy quota of 10 percent sugar production, taken by the government at controlled price for supply through PDS, be abolished so that capitalists can sell even this quantity at market price.

Simultaneously, Indian and international traders in sugar have been making windfall profits both through exports and imports. 

Sugar is an essential commodity for the vast masses of Indian people. It is also a commodity of which stocks can be built up in years of over production, to take care of  years of under production. It is possible to ensure that the livelihood interests of the sugarcane farmers as well as of the masses of working people who consume sugar, can be safeguarded. This requires a government that ensures that sugar cane production is planned, that the government procures the sugarcane at prices which ensure that the farmers can at least make both ends meet, that sugar is available at affordable prices to the working people, and that wholesale internal as well as foreign trade in sugar is controlled by the government in the interests of the working masses. The crucial question is in whose interest the government intervenes, and from all the evidence available on this issue, it is clear that the UPA government has acted on behalf of the corporate producers, traders and exporters and against the interest of the people.

While the government made a show of banning futures trade in sugar in May 2009, hoarding of stocks and speculation in essential commodities like sugar are allowed to go on without any constraint. Working people should demand that the government takes over all stocks of sugar now held in the private domain, make arrangements for stocking the same securely and for its release so that sugar prices are driven down. We should demand a commitment to and implementation of such steps by the government as would effectively arrest the prices of sugar and bring about a reduction at the earliest.