Sugarcane row: Resolve quickly

It was prudent of the government to have stepped back on Thursday and offer assurances of modifying the ordinance on the price of sugarcane that led Uttar Pradesh’s farmers to mount a massive dharna before Parliament House in New Delhi on the opening day of the Winter Session. The issue has united the Opposition and even induced sections of the ruling United Progressive Alliance — notably the DMK and the Trinamul Congress — to extend solidarity to the farmers. The country is reeling under a price shock as kitchen essentials have gone out of the reach of most people. This can be an ingredient for an explosive political situation, particularly while Parliament is in session. To alienate the farming community as well at such a time would make the government look uncaring. The crux of the matter is the October ordinance which fixed the fair and remunerative price (FRP) of sugarcane at Rs 130 per quintal. The FRP replaces the statutory minimum price (SMP), which was Rs 110 last year. Over and above the SMP, the Uttar Pradesh government was wont to declare a state advised price (SAP), which was higher than the SMP. Maharashtra, Gujarat and Karnataka also paid their farmers a price above the SMP. The SMP rose to Rs 165 this year. But farmers in Uttar Pradesh — the country’s largest cane producer — are demanding Rs 280 per quintal. If this demand is met, the retail price of sugar will climb above Rs 40 per kg. The Union agriculture minister, Mr Sharad Pawar, has been accused of favouring the big sugar mill owners through the controversial ordinance, under which state governments cannot declare their above-SMP deal for farmers. However, the ordinance does not stop the mills from offering farmers a higher price if they are able to absorb the difference between the FRP and whatever they agree to pay. However, the UP farmers’ demand for Rs 280 per quintal is unthinkable for the state’s sugar mills. Since crushing is yet to begin in UP, the Union government might just have some leeway in getting the mills to offer a deal that could be close to the SMP of Rs 165 that the UP government was to offer this year. Moderating the effect of the ordinance, the Centre could also raise the FRP. If the demand of the UP farmers were to be met in its entirety, the acreage under cane will increase. This will create a glut which will make prices fall. At that stage, there isn’t any government support. The other outcome of a substantially higher price to cane growers will be a further snowballing in the price of retail sugar, although the price of cane isn’t always the only reason for the upward movement of the retail price. The government needs to be realistic as well as deft in its negotiations with the Opposition parties so that the matter is resolved as soon as possible. Otherwise we may expect to arrive at a season of political mobilisations early in the career of UPA-II.