This year may turn out to be a none-too-happy year for tens of thousands of sugarcane farmers. On the one hand, their serious difference with the sugar mills over price persists, and on the other, they have been hit hard by the agitation and violence in the Tarai. As a result, transport of sugarcane from fields to mills severely suffered, and much of the cargo dried up. In frustration, the hapless farmers even registered their protest by dumping piles of sugarcane on the roads. According to an estimate, 20 lakh quintals of sugarcane is going to dry up in the fields this year, accounting for about one-fifth of the national output. The row erupted after the factories refused to pay the price they had agreed to pay in line with the price fixed by the Righa Sugar Industries in Bihar. Accordingly, the factories should purchase sugarcane at Rs.184 per quintal. The farmers have to operate in a monopolistic market; besides, the mill owners work as a cartel. So, before they produce, the farmers reach an agreement with the mill owners as to the quantity and price in case they otherwise fail to sell this highly perishable crop.

The mill owners claim that they have been operating at loss for various reasons — the smuggling of sugar from across the border, leading to unsold stocks of hundreds of thousands of sacks of sugar, the price fixed in India ‘in view of the elections’, the Tarai agitation, the government tax on sugar (Rs.3.50 per kg), and the mills’ inability to raise the sugar price. The mill owners also seek subsidy. But the farmers argue that whereas sugar in retail fetches somewhere between Rs.35 and Rs.40 per kg, the total unit cost of production comes well below it. Sugarcane producers allege that the factories themselves are involved in sugar smuggling. Most of the arguments of both sides have merit in varying degrees. For instance, the Tarai disturbances have hit both the mills and farmers.

From the farmers’ point of view, the refusal to pay the agreed price after the crop has been harvested is unfair. Almost all sugarcane farmers take loans to pay for the production cost at double-digit interest, and the Agricultural Development Bank provides loans only on the recommendation of the sugar factories, say the farmers’ representatives, adding that the factories, on the contrary, get loans at a much lower rate of interest. Moreover, delayed payments by the factories cause inconveniences or even loss to the farmers. For instance, when farmers cannot repay their bank loans in time, they are fined. All this shows there is a need to address the sugar industry’s problems, balancing the interests of both entrepreneurs and farmers, but without adding unnecessary burden on the consumers. To do this, the claims and grievances of each need to be examined. The government should play a major role in this regard. That said, however, it would be only honourable for the mill owners to abide by the price agreement. If the benchmark sugar price were just Rs.160 this year, would the mill owners pay the farmers Rs.168, the price of last year? No. Profit and loss are normal business phenomena.