Graft, opacity, political meddling bleeding Maharashtra sugar industry white

Political interference, corruption, personal interests, and want of professional management have melded together to create a financial moras in a key constituent of the state economy, the cooperative sugar industry. This year again, the sugar factories are facing problems for being unable to pay the fair and remunerative price (FRP) as decided by the union government.

It was way back in 1950 that Padmashree Vitthalrao Vikhe-Patil started the first cooperative sugar factory in the state. It was mainly because of exploitation of cane growers by private mill owners and money lenders that Vikhe-Patil decided to form a cooperative sugar factory. He had brought together cane growing farmers from over 40 villages in Ahmednagar district to form the first-of-its-kind cooperative sugar factory in all of Asia. That is why he is referred to as Sahakar Maharshi, or pioneer of cooperative sugar factories in the state.

After the establishment of Maharashtra in 1960, the state had always promoted the cooperative sector. Initially, the state even provided part of the capital for raising the cooperative sugar factories and, at times, has since provided loans, subsidies and export subsidies for sustaining the financial health of the sector.

The factories have made cane growers - who give the produce to the factories - their shareholders. There are about 20,000 in each mill, and the rate at which cane is purchased from them varies from one factory to the other depending upon cane quality. Over the years, sugar factories became the new power centres and training grounds for budding politicians who created a network of cooperative credit societies, milk societies and multi-purpose cooperatives, creating a stronghold in the rural economy as well as in politics.

Due to mismanagement, corruption and lack of transparency in their functioning, cooperative sugar factories started encountering financial problems. It was mainly because cooperatives became family-run enterprises and a handful of directors or politicians minted money; a chosen few got richer day by the day while the condition of the factories and farmers worsened.

Overview: sugar factories in the state

At present, 174 sugar factories - 76 private and 98 cooperative - are functional
Total cane crushing till date: 41.9 million metric tonnes (as per sugar commissioner office website)
Total sugar production till date : 447.47 lakh quintals
India's share in the global sugar production: 16%
The country is second only to Brazil, which produces 33% of the world's sugar
Maharashtra's share in sugar production in the country: 35%, highest in the country
Number of people who depend on cane farming for their livelihood: 2.5 crore (more than one lakh are directly employed by sugar production; more than 8 lakh labourers who get employed through cultivation, cutting as well as transportation of cane)
The state in 2011 stipulated the minimum aerial distance of 25 kms between two sugar factories
Vasantdada sugar institute is the only such organization founded with contribution from cane growers for research and development of the sugar sector
Sugar production in the state, which was 10 lakh tonnes in 1950, has gone up to more than 200 lakh tonnes now

Blaming the Congress-NCP leaders in the state for the crisis bogging down the cooperative sugar factories in the state, Swabhimani Shetkari Sanghatana president Raju Shetty on Wednesday said that they have looted the cooperative sector and exploited it for political gains for years.

In an interview with dna, Shetty, Lok Sabha MP from Hatkanangale constituency in Kolhapur, said that various leaders have systematically swallowed sugar factories by inviting a financial crisis, and then buying them to convert them in private entities.

What are the reasons for consistent losses for a number of sugar factories in the state?

Corruption by those at the helm of affairs is the main reason. The money from sugar factories was utilized to create their own empires in rural Maharashtra and appointing their own men, which has resulted in nepotism coupled with heavy corruption, in the process cheating cane growing farmers. I am convinced that no cane grower gets paid for the exact weight of the sugarcane he sends to any factory. You will understand the dimension of the losses this piles up once you know that the member-farmers in each factory number between 10,000 and 25,000. If you consider that the cane weight is under-weighed even by half or one tonne for every truck entering the factory, you can imagine the amount of money the mill owners have minted for decades and what sort of losses the farmers have borne.

But the sector was once flourishing in the state. What happened suddenly?

You should know that the government had even provided capital investment by providing share capital for most of the factories. You may be surprised to know that many of the sugar factories have not yet repaid that initial loan to the government. In addition to this, they have availed of a number of subsidies including that for export and excise loan limit extension.

Why are factories not in a position to pay the fair and remunerative price (FRP)?

The entire sector was going through rough weather but it is always only for the cane grower and not for those running sugar mills. The financial problems are created by these people so they can buy the factories and convert them into private ones. This has happened in Maharashtra before. If they are not ready to pay FRP determined by the union government, they are definitely playing politics since they can have leverage as the state government has waived purchase tax. Also, the rising prices of molasses (a sugarcane byproduct) would make money for the mills. Furthermore, the government would allow export (selling outside state) of 2 million tonnes of raw sugar, which can further help the mills.
If they are still not ready to pay FRP, then it surely is the game plan of Congress-NCP-affiliated factory owners to create anger among farmers against the new government.