Low Prices, Delayed Payments and Pests Are Pushing Western UP's Sugarcane Farmers Into Crisis

Sugarcane used to be something of an 'insurance' crop in the region, bound to bring returns. But not anymore.

This is the second article in a three-part series on agrarian distress in Western UP. Read part one here.

Meerut: At a farmers’ organisation meet on June 13 in Meerut, Bharat Bhushan Tyagi, a farmer from Bulandshahr, was speaking to fellow farmers from Meerut and other districts of Western UP. “At 24, when I completed my MSc from Delhi University in 1972, I got a job at a private firm. At that time, my father said to me ‘Naukri chhod, kheti kar, zyada fayda hai’ (Forget about the job, work on our farm instead, it is more profitable)’. Now, a father tells his 24-year-old son, ‘Kheti chhod, chaprasi ban ja (Forget about agriculture, become a peon instead)’,” he said to a large, agitated gathering of farmers at the Brahspati Bhawan of the Chaudhary Charan Singh University, gathered in the sweltering heat. As the gathering grew more charged, Tyagi’s speech gained momentum and aggression, “Jai jawan Jai Kisan was coined by Lal Bahadur Shastri in 1965. Tab desh bhooka tha. Tab humari zaroorat thi, to hum fauji ke barabar the, aaj desh khushhaal hai to humein bhool gaye (At that time the country was hungry. They needed us and hence we were treated as equal to soldiers. Now that the country is better off, we have been forgotten),” he said to raucous applause and whistles.

An old and frail farmer got up from his place in the crowd, stood on a chair and began to yell, “Chaudhary Charan Singh aur Mahendra Singh Tikait jaise mahaan kisan netaon ki zameen par kisan khudhushi kar rahe hain. Ab ganna bhi humare liye beema nahi raha (Farmers are committing suicide in the land of great farmers’ leaders like Chaudhary Charan Singh and Mahendra Singh Tikait. Even sugarcane is not an insurance for us anymore)”.

Change, but not for the better

Discontent among farmers in Western UP has been brewing for the last few years as the region, often referred to as ‘prosperous’, has slipped – quite unnoticed – into an agrarian crisis, like most of the country.

Khursheed Khan and Rakesh Raman, economists at the Benaras Hindu University, have developed an ‘index of crisis in agriculture’, which measures the extent of the crisis in a region based on indicators such as average loans due, average yield, per capita production, proportion of sown area, cropping intensity and profits. In a 2014 paper titled ‘Crisis of Agriculture in Uttar Pradesh: From apprehension to actuality’, they divided the index into five ranges – very high, high, moderate, low and very low – and made calculations for all the districts of UP for two time periods, 2001- 2004 (T1) and 2008-2011 (T2). In T1, only four of the 24 districts of Western UP fell either in the ‘very high’ or ‘high’ categories based on their index score. In T2, however, that number increased to 14. Consequently, the number of districts in the ‘very low’ or ‘low’ levels of crisis fell from 13 to 6, posing a challenge to the claims of agricultural prosperity in Western UP.

Source: ‘Crisis of Agriculture in Uttar Pradesh: From apprehension to actuality’, Khursheed Khan and Rakesh Raman, 2014

Source: ‘Crisis of Agriculture in Uttar Pradesh: From apprehension to actuality’, Khursheed Khan and Rakesh Raman, 2014

According to the authors’ analysis, the extent to which the crisis has worsened in Western UP between the two time periods is equivalent to the manner in which the crisis has worsened in the infertile and rain-starved region of Bundelkhand during the same time period.

“The crisis is worsening in all parts of the state and the country as the government is not taking the steps necessary to get agriculture out of the mess that it is in. The situation in Bundelkhand has never been good and it is just heartbreaking to see Western UP go in the same direction,” Kuldeep Tyagi, president of the Bhartiya Kisan Andolan, told me on the sidelines of a farmers’ protest in Meerut in late April.

A pile up of delayed payments

Tyagi’s organisation was protesting the non-payment of sugarcane dues to cane farmers by sugar mills. At the time, sugar mills in the state owed cane farmers Rs 4,000 crore for the 2016-17 season and Rs 6,600 crore for the 2015-16 season. “The delay in payment from sugar mills is something that happens every season. But this time we were hopeful, as the BJP had promised before the elections (the 2017 assembly elections in the state) that sugar mills will be made to pay up within 14 days,” Tyagi said.

He was referring to the BJP’s election promise of clearing sugarcane dues within 14 days, in a campaign that focused heavily on the farmer, especially the sugarcane farmer, before Western UP went to polls in the first phase of elections. On February 4, in his first election rally during the UP campaign, Prime Minister Narendra Modi said, “My sugarcane farmer does the hard work. The sugar mill owners are fat, but my farmer has nothing to gain. My government in UP will clear dues within 14 days”.

Following up on this after forming the government, chief minister Adityanath directed sugar mills to clear all pending dues of the 2016-17 season by April 23, failing which, he said, FIRs would be registered against mill owners.

“But nothing happened. April 23 came and went. There were dues in excess of Rs 10,000 crore (including dues of the previous two seasons) at the time. The problem is that nobody seems to want to understand the value of timely payment for a farmer,” said Rakesh Tikait, president of the Bhartiya Kisan Union and son of the legendary farmers’ leader Mahendra Singh Tikait.

Also read: Aspiration, Debt and Death – The Story of One Sugarcane Farmer is the Tale of Western UP

More than two months after the April 23 deadline passed, as of July 11, there still remain Rs 2,637 crore of unpaid dues for the 2016-17 season. Despite the chief minister’s diktat, zero FIRs have been registered against cane mill owners.

Like most other sugarcane-producing states, UP announces a state advised price (SAP) for sugarcane, which is generally higher than the fair and remunerative price (FRP) announced by the Centre. During the 2016-17 season, the SAP in UP was Rs 315 per quintal, while the FRP announced by the Centre was Rs 230 per quintal. The sugar mills in the state are required to pay at least the SAP within 14 days of purchase of sugarcane from the farmer. However, it is common for cane farmers in the region to not receive any payment for several months and not receive full payment until the next season.

As of July 11, sugar mills still owe farmers Rs 57 crore and Rs 40 crore for the 2015-16 and 2014-15 seasons respectively. “The delays in payment play a huge role in the crisis of sugarcane farming. The entire sowing cycle for the farmer gets disturbed because of these delays, as the farmer does not have any working capital. It also pushes him deeper into the debt cycle, as he is compelled to borrow despite having earned an income which he has not received,” T. Haque, an agriculture economist, told The Wire.

The laws require sugar mills to clear farmers’ dues within 14 days of purchase, failing which mills are bound to pay interest on the amount due at the rate of 15% per annum for the period of the delay. However, the interest amount is seldom paid to farmers. “It never even enters our calculations because we have seen that in the past, very rarely has any interest been paid to us. We are just happy if we get the amount that is due to us,” said Krishan Pal, a cane farmer from Chandrauli, a village in the Saharanpur district.

In October 2016, the then Samajwadi Party (SP) government in UP, citing low sugar prices, decided to waive an amount of Rs 2,000 crore which sugar mills in the state owed farmers as interest on delayed payments. In March 2017, however, the Allahabad high court set aside the decision, using strong words, “The state government waived the interest, citing mills’ inability to pay in view of low sugar prices. But by that logic, shouldn’t the interest being paid by farmers on loans from state-owned and cooperative banks also have been waived? In this case, farmers were basically supplying cane to mill at zero interest, even while borrowing at 10-15% or more themselves”.

However, no interest payment has been made yet to farmers. “That interest amount has still not been paid by the mills and the government has done nothing about it,” said Pushpendra Singh, president of the Kisan Shakti Sangh, a farmers’ organisation that has been working in Western UP for several years.

Sugarcane farmers are still owed Rs 2,637 crore in unpaid dues for the 2016-17 season. Credit: Bo Jayatilaka/Flickr CC BY-NC 2.0

Sugarcane farmers are still owed Rs 2,637 crore in unpaid dues for the 2016-17 season. Credit: Bo Jayatilaka/Flickr CC BY-NC 2.0

Prices aren’t keeping up with costs

Even without the delays, cane farmers in the region feel that the amount of the SAP is too low in the face of rising costs. “A bag of urea (50 kg) used to cost Rs 220 three years ago, now it is Rs 330. The prices of all inputs have been going up consistently the last few years. The price that we get from sugar mills has not gone up in that proportion,” said Krishan Pal at his five-acre farm in Chandrauli.

The SAP determined by the UP government was increased to Rs 315 per quintal for the 2016-17 season. This increase came after three years, during which the price of cane remained fixed at Rs 280 per quintal. “Inflation did not freeze like the prices did. Costs keep on increasing for the farmers, but their income remains stagnant,” Haque told The Wire.

Sudhir Panwar, who has been on the State Price Fixation Committee for sugarcane for the last seven years, says that the gap between the cost of production and the SAP is narrowing every season, as the cost estimates of the government underestimate the actual cost borne by the farmer. “Last year, the government’s estimate of the cost of production was Rs 270 per quintal. The SAP, at 315, is only about 15% higher than that, which is simply not enough to cover the additional costs that the farmer has to bear and the risk involved. And the government cost estimate is actually an underestimate. Several cost estimates such as labour costs are lower than the real cost that the farmer has to bear,” said Panwar.

Krishan Pal claims that he has had to pay as much as Rs 400 per day to labour working on his farm during the current season. “In the last few years, labour has become very expensive. They often demand Rs 300 for only half a day’s work during crushing season and Rs 400 for a full day,” he said as we walked through his farm.

New variety, new problems

Krishan Pal also pointed out that the incidence of pest infestation has increased. “Ye dekho keede waala ganna (Look at this pest-infested sugarcane). Keeda lag gaya hai adhe khet mein, ab ye ganna bekar ho gaya (Half of the field is infested with pests, all this sugarcane is now wasted). I have had to use pesticides worth around Rs 10,000 to prevent the disease from spreading to the entire farm,” he said.

Sandeep Choudhary, assistant professor at the Krishi Vigyan Kendra in Hastinapur, explained that risk from pests has grown as the use of a new variety of sugarcane, the CO 0238 variety, has become more prevalent. “The CO 0238 variety has higher yield and higher sugar recovery, which means it is better for sugar mills. But the risk for farmers has increased as it carries a much higher risk of diseases compared to the previous variety. And the costs of pesticides has also gone up in the last few years, so the cost for farmers has grown significantly,” he told The Wire.

These problems have contributed to what Khan and Raman in their 2014 paper refer to as the “poor performance of the main cash crop of the state, sugarcane”. According to their calculations, during the three-year period ending 2011, the area under sugarcane declined, as did its production, while the yield has been stagnant. Significantly, among the main crops of UP that the authors analysed, sugarcane’s performance was the worst.

For a long time, sugarcane was a major contributing reason for the prosperity of the most well to do region of the state. But things have changed. “Sugarcane is no longer the golden cash crop that it was. Sugarcane farmers in Western UP are no longer prosperous. He is no longer at an advantage compared to other farmers. There is a crisis simmering and things could blow up any time. All it will take is one bad monsoon,” said Panwar.

Kabir Agarwal is an independent journalist whose writings have appeared in The Kashmir Walla, The Times of India, Mint, Al Jazeera English and The Caravan.