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Crushed by the cane lobby,Nov 3
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Crushed by the cane lobby,Nov 3
Dear Editor:Maharashtra is the largest producer of sugar in India, contributing almost 37 per cent of the total national output. The 2016-17 sugar season is distinctly different for three reasons. First, this year marks the completion of a decade since major reforms were introduced in the Sugarcane Control (Order), 1966 via reduction of the aerial distance limit between two sugar units to 15 km from 50 km and the dropping of provision 5B, also known as “Bhargava formula”; the provision had enabled limited profit sharing out of excessive realisation from the sale of free sugar, in case of erratic cane supply, with cane farmers of the mill. Second, the estimated availability of sugar cane this year stands at 445 lakh tons, implying that the State will produce just 5 million tons (MT) of sugar as against 8.5 MT last season. With just 90 days of crushing, a large number of mills will remain shut resulting in idle machinery, extra manpower cost, and a likely default on term-loan repayment leading to non-performing assets. Third, the Raju Shetti-led Swabhimani Shetkari Sanghatana, championing the cause of sugar cane farmers for the past 15 years, is agitating for an increased cane price. Cooperative sugar mills have contributed largely to the development of rural Maharashtra by providing consistent farm income to large shareholding members. But the ownership profile of sugar factories in the State has undergone a major change in the past decade with the amendment to Section 6A of the Sugarcane Control (Order), 1966. The change has also been accentuated by the questionable practice of lending banks, especially the Maharashtra State Cooperative Bank, taking over assets under the provisions of the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, 2002. Data indicate that altogether 68 cooperative units were liquidated and sold later to the private sector, to entities floated by cooperative barons themselves, with a few exceptions. The bigwigs of the sugar cooperatives, including former State cooperative ministers, floated private sugar units, in a way sowing the seeds of doubt on the working and efficacy of the cooperative model. The number of private sugar factories in Maharashtra has consistently increased from 2006-07. Almost 154 private sugar units have obtained Industrial Entrepreneur Memorandum (IEM); at present there are 78 operational private sugar mills with total crushing capacity of 2.48 lakh tons of cane per day (TCD) as against a mere 12 private units a decade ago. In comparison the number of operational cooperative units stands at 102 with a capacity of 3.52 lakh TCD. Private sector capacity gradually increased from 10 per cent of the total sugar production in the State to 45 per cent.
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