With Exploitative Mills in Wait, TN’s Cane Farmers Apprehensive of New Contract Farming Law

With the Tamil Nadu government doing away with the State Advisory Price (SAP) and introducing a Revenue Sharing Formula (RSF), sugarcane farmers fear they are staring at a bleak future. They say that a lack of legal protection in the new contract law enacted by the state government will further strengthen the mills, known for not paying the farmers on time habitually.

Sugar mills owe Rs 346 crore to the farmers in the 2018-19 season of which the government and cooperative mills are also parties. The farmers have brushed aside a report by the NITI Ayog which claims that sugarcane farmers are earning high margins as a result of the Fair and Remunerative Price (FRP) and an even higher SAP in some states, including Tamil Nadu.

The farmers are in a state of distress while reports by the NITI Ayog and Commission for Agricultural Costs and Prices (CACP) claim otherwise.

CANE FARMERS OPPOSE RSF

Tamil Nadu is one among three states to implement the RSF – Maharashtra and Karnataka being the others. The RSF recommends that a share of 70% from the revenue generated from the sale of sugar and 75% of the share from the sale of other by products, including molasses, be given to the farmers.

The possibility of farmers being kept in the dark by the sugar mills regarding the actual revenue generated and misquoting the recovery rate are highly probable, farmers’ organisations fear.

D. Raveendran, general secretary of Tamil Nadu Sugarcane Farmers Association said: “The Indian Sugar Mills Association (ISMA) has already demanded that the Union Government abolishes the FRP post RSF. The demand may be accepted very soon, leading to the high probability of hiding revenue detail and recovery rate by the mills. With no guarantee on price fixation from governments, the farmers may be left to the mercy of the mills”.

The farmers have doubts about the recovery rate from sugarcane as reported by the mills, resulting in a loss of revenue to them. The state has a lower recovery rate of 8.83% from cane in 2018-19, despite the higher production.

Source: Policy Note 2019-20, Agriculture Department, Govt of Tamil Nadu

CONTINUE FRP/SAP

The farmers have demanded that the FRP or SAP remain for assured returns. However, the new laws and policies are loaded against them in favour of the sugar mills, they said. The NITI Ayog and CACP reports appear to be more concerned about the challenges faced by the sugar mills and repeatedly claim that farmers are well placed to generate profits.

The farmers have been demanding the implementation of the Swaminathan Commission recommendations for an assured income while the union government has implemented the C. Rangarajan Committee recommendations. The state government has obliged too, much to the dismay of the farmers.

The announcement of an FRP of Rs 285 per quintal – an increase of Rs 10 from the previous year – is not expected to have any impact on the farmers in the state as the RSF is in place.

“We have been demanding a minimum price of Rs 500 per quintal for the past three years while the state government has retained the SAP at Rs 275 for four consecutive years till 2018-19. The government was unwilling to listen to our demands due to pressure from the sugar mills association,” Raveendran alleged.

TN ENACTS NEW CONTRACT FARMING LAW

Tamil Nadu became the first state to enact a new law for contract farming as per the Model Contract Farming Act announced in the 2017-18 Union Budget. The Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act received the President’s nod in October 2019.

As per the law, which includes 110 items, the price, quantity and the delivery schedule are fixed during negotiations between the farmer, or a group of farmers, and the procurer.

The farmers cite the lack of legal binding to settle disputes, with a provision for approaching a Dispute Settlement Committee chaired by a Revenue Officer of the sub-division of the district is enclosed.

“In most cases the private procurers are known to violate the agreement. The sugar mills are not paying the money to the farmers within the mandated 14 days of procurement as per the Sugar (Control) Order, 1966. We have taken up a legal course of action to claim the dues; the absence of any such provision will hurt the farmers badly”, added Raveendran.

‘MILLS ARE HABITUAL OFFENDERS’

The abolition of legal protection under the new law is expected to add to the high-handedness of the sugar mills. The CACP report on Price Policy for Sugarcane states that arrears to the farmers from Tamil Nadu stands at Rs 346 crores during the 2018-19 season. The report has also cited the excessive production of cane for burdening the mills.

There have been allegations that the mills are not paying the farmers and the workers; allegations of farmers being tricked by private mills are also prevalent.

“Despite several legal protections, private mills have proved to be habitual offenders. The new laws, without any legal security, will prove to be more advantageous to the mills and affect farmers. Since 2005-06, dues to the farmers amount to Rs 1,454 crores at a time when the mills made huge profits,” added Raveendran.

The government and cooperative mills, marred by mismanagement have also been delaying payment to the farmers on time.

The lack of a policy on producing bio-fuel from cane is also hindering the growth of the industry. The CACP and NITI Ayog reports concentrate more on limiting cane production while its target should be to increase production and compete in the global export market, the farmers say.