Five crore sugarcane growing farmers of the country are once again facing a grave crisis. They have not received payment for months from sugar mills, for the sugarcane supplied to them. Till the end of January this year, sugar mills owed farmers as much as Rs. 13,932 crore. This is admitted by the organization of capitalist owners of sugar mills, the Indian Sugar Mills Association (ISMA). Sugar mills in Uttar Pradesh owe farmers as much as Rs 5,553 crore, followed by Karnataka (Rs2,714 crore) and Maharashtra (Rs2,636 crore).
Sugar mills are supposed to make payment to farmers within 14 days of sugarcane supply and pay interest at the rate of 15% for delayed payments. However, out of 196 cooperative and private sugar mills in Maharashtra, 172 had not made any payment till 9th January for sugarcane supplied since October 2018. The crisis has affected 45 lakh peasants in UP and 25 lakh peasants in Maharashtra.
Data for earlier years show that unpaid amounts to farmers in some years were more than half of the total amount payable to them (see Figure A).
Production of sugar goes through periodic cycles in our country, as a result of the anarchy which is characteristic of the capitalist system. Periods of too much production are followed by periods of shortage (see Figure B).
Capitalist mill owners increase production and purchase of cane when there is a shortage and prices are high. This continues until a situation of excess production is reached, resulting in unsold stocks of sugar and a fall in its market price. Then the capitalists cut back production and stop paying the sugarcane growers. They start demanding interest waiver and other concessions from the state and central governments. This situation continues until the price of sugar rises so high as to make it profitable once again for the capitalists to step up production.
One of the specific features of this sector is that sugarcane loses its sugar content unless it is crushed soon after being harvested. Sugarcane growers are therefore linked to specific sugar mills to which they supply the cane. They do not have the option of selling their produce somewhere else if a particular mill has not paid them their past dues.
The capitalist mill owners enjoy high profits when the price of sugar is high, and when there is excess supply they shift the burden of their losses on to the backs of the sugarcane farmers. In other words, the peasants who grow sugarcane are made to pay the price for the anarchy of capitalist production.
In the words of a sugarcane farmer in Maharashtra, “If the rain fails and there is no crop, we starve. If we get a good crop, the mills say there is glut in the market and then also we starve. Is this justice?”
The easiest way to overcome the cycle and stabilise production and prices is for the State to increase its role in sugar distribution. If the central and state governments create an adequate buffer stock, they can sell more sugar when there is shortage and buy more during periods of excess supply. However, government policy has moved in the opposite direction. Before 2013, the sugar mills were required to supply 10 per cent of production at a concessional price for the public distribution system. Now they have been allowed to sell their entire production in the market. The role of the State in sugar distribution has been cut back instead of being strengthened.
Both central and state governments keep offering interest free loans and other forms of subsidies to sugar mill owners, while they refuse to do anything to address the longstanding problem of the sugar cycle and the periodic suffering of crores of sugarcane farmers. Peasants continue to be at the mercy of the capitalist mill owners. Their helpless situation is exploited cynically by rival parties to expand their vote banks.