Bitter truth of sugar cooperatives: They are a drain

Almost all powerful politicians in Maharashtra have built up their fiefdoms on floating cooperatives—mainly sugar cooperatives—that ensure a captive votebank and function as political centres as well. Right from the days of Nehruvian socialism to Manmohan Singh’s liberalisation, the sugar cooperatives have thrived and this has helped the politicians flourish. Since sugar barons have been ruling the state for the past 47 years, the state has always bailed out sugar cooperatives by doling out subsidies and waiving taxes, whenever necessary.

This year, the state is facing an unprecedented sugarcane glut. The area under sugarcane cultivation has grown from about five lakh hectares in 2005-6 to over 8.40 lakh hectares in 2006-7. The sugar production has increased from 62 lakh tonnes to 91 lakh tonnes, respectively. Consequently, estimated 25 lakh tonnes of sugarcane could not be crushed.

In keeping with its policy of bailing out sugar cooperatives (163 out of the existing 187 that crushed cane this season), the Vilasrao Deshmukh Government has announced a series of relief measures for sugar cooperatives. These include a waiver of purchase tax worth Rs 254 crore, transport subsidy of Rs 40 crore and an export subsidy worth Rs 100 crore.

The state has also announced a compensation of Rs 25,000 per hectare for uncrushed cane. However, sugar cooperatives, farmers’ organisations and a Congress fact-finding committee have demanded that the compensation be hiked to Rs 60,000 per hectare. The state has now approached the Centre to increase the amount to Rs 50,000 per hectare.

Every year, the state reviews the sugarcane situation in May. It not only failed in assessing the situation last year, but after the crisis of surplus cane, blamed farmer agitations, claiming that they caused a delay in the commencement of the crushing season by about a month. But the agitations were confined in western Maharashtra, while the surplus sugarcane (which could not be crushed) was in the Marathwada region. It is this region where several Congress leaders like CM Deshmukh, NCP leaders like Rajesh Tope and even BJP leader Gopinath Munde run sugar cooperatives.

The vital issue is that the area under sugarcane is increasing and next year, according to estimates of the fact-finding committee of the Congress, there is an overall 10 per cent increase in the area and production. It is estimated that the sugar production next year would be between 95 lakh tonnes to 100 lakh tonnes. Since the situation is going to worsen further, the time seems to be ripe for introducing some kind of crop-planning. The area under sugarcane cultivation could be curtailed to maintain the balance of demand and supply.

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