Monday, October 15, 2012

AIKS statement on the Rangarajan Committee on Sugar Decontrol

The All India Kisan Sabha (AIKS) strongly condemns the Rangarajan Committee recommendation for total decontrol of the sugar industry. This move pushed by the Congress-led UPA Government will only promote the interests of the profit seeking Corporate Sugar Mills at the expense of the farmers, consumers and the Cooperative sector. The Government is pushing for decontrol of sugar to aid the sugar lobby and big corporates who also are defaulters in terms of huge arrears that need to be paid to Cane Growers. This move is at the behest of the sugar lobby which has been demanding removal of controls and allowing for unbridled profiteering. Opinion of AIKS on the major issues raised by the Committee is given below:

On Removal Of State Administered Price: 

AIKS rejects the Committee call for ending the State Administered Price (SAP) of sugarcane set by the States in favour of the Fair and Remunerative Price (FRP) set by the Centre as the minimum. This is against the principles of federalism guiding Centre-State relations as well as against the spirit of the Apex Court judgment in 2004 reinforcing the State Governments’ right to announce SAP. The right of the State in fixing prices must be safeguarded. It is notable that the ‘Fair and Remunerative Price’ used by the Central Government is a deceptive term and is far below the cost of cultivation in all States. In the name of “Rationalisation of Sugar Cane Pricing” the Committee is pitching for the discredited FRP which is neither “Fair” nor “Remunerative”.  This move is against the interest of the Cane Growers. 

On Removal of Levy Sugar Obligation: 

AIKS rejects its recommendation that the levy sugar obligation and administrative control on non-levy sugar must be immediately ended. Under this obligation mills are required to sell 10 per cent of their production to the Government at below market price for the poor under the Targeted Public Distribution System (TPDS). The Committee also suggests that the States that wanted to provide sugar under the TPDS might procure from the open market through competitive bidding, and then fix an issue price. It also has asked the Government to “rationalize” the current issue price for TPDS sugar. The Food Ministry is reported to have already proposed to double the issue price to around Rs. 23/Kg. This move is going to have a cascading effect on the prices of sugar for the TPDS beneficiaries and States will end up coughing out huge resources for buying sugar from the open market for TPDS supply. The price of sugar in the open market will also sky rocket. In effect the move is against the TPDS and the poor. It has to be noted that earlier the levy sugar obligation was 65 percent and 35 percent alone was for the open market. This had been gradually altered to 10 percent levy sugar and 90 percent for open market. By doing away with the obligation of even 10 percent levy sugar the Government intends to allow a free hand to Private players to fix prices.

On Removal Of The Cane Reservation Area: 

The Committee has suggested the removal of the concept of a Reservation Area of a minimum distance of 15 km between any two sugar mills. As of now it is obligatory that a mill buys cane from growers within the reservation area. Instead the Committee suggests that mills must enter into contracts with farmers and the Cane Reservation Area and bonding must be phased out. This move will only promote monopolies of big corporate sugar mills and destroy the Cooperative sector. Companies will no longer be bound by any agreement on Government fixed prices. It will open the way for loot by the sugar lobby and Cane Growers will be at the mercy of Private players.

On Tagging Order: 

The Committee recommends that the mills must share 70 per cent of the value of sugar and each by-product, including bagasse, molasses and press-mud as cane dues payable to farmers for supplies. The payment to farmers will be made in two steps: the first, the minimum FRP set by the Centre; and the second, subsequent to the publication of half-yearly ex-mill prices. The Tagging Order earlier was 80 percent of the value of sugar and each by-products and the Committee has only reduced it further to the detriment of the Cane-Growers. The Mills have also defaulted on paying this amount. They have arbitrarily fixed the recovery rate often much below the actual and reports of fraudulent weighing of produce are rampant. The Sugar Mills’ word is taken as final on both recovery and weighing and there is no check on them. Cane Growers never really have benefited from value of by-products. There is no mechanism in place to ensure that the Cane Growers get any share of the value of by-products. In such a context to give a free unregulated role to the Sugar Millers will only lead to their strangle-hold over the market.

On Export and Import Policy: 

The Committee in the name of a stable trade policy calls for outright ban or doing away with quantitative restrictions once and for all. It calls for liberalisation of sugar trade over a two to three year period in a calibrated and phased manner. It suggests a moderate duty on imports and exports and suggests that Export and import policy should not be guided by domestic availability. It argues for promoting exports by arguing that even though India contributes 17 per cent to the global sugar output, its share in exports is only four per cent. It also keeps the doors open for imports from outside as well as the possibility of dumping of sugar by calling for an outright ban on quantitative restrictions. We have seen the adverse impact of withdrawal of quantitative restrictions and import duties as well as linking of prices to the volatile world market prices in the case of other commercial crops. While farmers bear the brunt of falling global prices, the Corporate Mills earn huge profits when global prices rise without transferring any benefit to farmers. Like in the case of decontrol of Seed industry, Fertiliser industry, Pesticide industry and Petroleum industry, the move will only lead to increased prices for the consumers and unending profits for the Companies. 

AIKS calls upon the State Units to rise up in protest against this move and resist this retrograde move tooth and nail. AIKS demands that the Government reject these recommendations and a Comprehensive Sugarcane Policy be evolved through consultation with the Cane Growers and Peasant Organisations. 


S.Ramachandran Pillai                                                                               

K. Varadha Rajan
General Secretary