National wage growth has slowed down considerably and was registered at merely 4% in 2014 as against 15% in the previous year.
The farmers of Sinchher-Vandana village in Maharashtra, who are totally dependent on the sugarcane production, are in meaningful distress, according to a report by Ambit Capital.
The report said that sugarcane farmers are reeling under meaningful distress owing to the crash in sugar prices as well as lower Minimum Support Prices (MSPs) on sugarcane.
The report said, "Sugarcane farmers highlighted two sources of distress and lowered profitability namely: first, the MSP for sugarcane increased at a modest pace of 4.8% year-on-year in FY15 compared to an average increase of 22% over FY10-14. Secondly, owing to the slump in sugar prices, mill owners are paying around Rs 2,100 per tonne tonne which is substantially lower than the cost of production which amounts to Rs 2,500-2,600 per tonne."
Source: CEIC, Ambit Capital research
Source: CEIC, Ambit Capital research. Note the FY here runs from June-May.
Ambit said that the anger among the farmers is palpable. It said, "It is critical to note that most of the anger emanating from the sugarcane farmer community was directed at the Government and the perception remained that the Government ought to be doing more to protect the interests of sugarcane farmers."
Sugarcane production constitutes 6% of the total agriculture produce in India and states like Uttar Pradesh, Maharashtra and Karnataka account for 38%, 19% and 12% respectively of India’s total sugar cane production.
Stagnating Wages
National wage growth has slowed down considerably and was registered at merely 4% in 2014 as against 15% in the previous year.
Ambit said that the village head attributed stagnation of wages over the past 12-18 months to losses in sugarcane farming, weak growth in MSP and collapse in sugar wholesale prices.
Source: RBI, Ambit Capital research
An additional factor that has caught people's attention is the demand for NREGA jobs which remains extremely low. Farmers say that this scheme which was created under the UPA government does not benefit them. Ambit said, "The present Government has tweaked the provision for NREGA in such a way that it mandatorily requires 60% of all the work done under the scheme to be skilled in nature. Given that most rural workers are unskilled, fewer workers are able to demand jobs."
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