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LATEST NEWS UPDATES | Decontrol sugar and set free the farmers

Decontrol sugar and set free the farmers

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published Published on Nov 23, 2012   modified Modified on Nov 23, 2012
-The Economic Times

The government must decontrol sugar, lift curbs on trade in molasses and allow proper markets to function in this sector. Ill-informed would-be saviours of farmers like Gen V K Singh oppose the move.

They only serve to fatten liquor barons like the late Ponty Chadha and depress farm incomes. As an article by Nidhi Nath Srinivas (ET, November 22) points out, wily politicians use control to make the sugar industry heavily subsidise the liquor business. Most state governments, and the parties that run them, are hand in glove with liquor barons.

They impose controls on trade in molasses, the mud-like sludge that is left after crystallising sugar out of cane. This is the raw material for almost all spirits made in India. Some states like Uttar Pradesh, India's largest sugar producer, also compel sugar companies to sell between 20 per cent and 25 per cent of their molasses production to alcohol makers.

All these controls mean that molasses has to be sold at distress rates during the peak sugar crushing season, when stocks have to be shed quickly. Thus, liquor companies can buy a tonne of the stuff for Rs 600, a fraction of the Rs 3,600 they would have had to pay in the open market. This reduces the cost of alcohol from Rs 30 to Rs 18 per litre.

The price sugar factories pay for the cane they crush depends on the total income they generate. Forcing sugar companies to subsidise liquor only serves to depress the price factories pay farmers.

Sugar control effectively transfers income from sugar farmers to liquor barons and politicians. This must end.

The Prime Minister has with him a report written by a committee led by C Rangarajan, which recommends decontrol of the sector. This must be implemented and molasses trade opened up across states. Further, decontrol should result in closer ties between cane farmers, who should form companies or cooperatives made immune to takeover by Registrars to run sugar factories in the vicinity.

There is a seamless relationship between cane, sugar, molasses and alcohol. Farmers, not liquor barons and politicians, should be allowed to benefit from this.

Vested interests will lobby against reforms, but the government has to stand firm and decontrol sugar.

The Economic Times, 23 November, 2012, http://economictimes.indiatimes.com/opinion/editorial/decontrol-sugar-and-set-free-the-farmers/articleshow/17330588.cms


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