Sugar row: Govt to repeal clause 3(B)

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Railway Minister Mamata Banerjee says the government will repeal clause 3(B) of the Sugarcane Control Order, 1966. Clause 3(B) states that state governments will have to bear the difference between the fair and remunerative price (FRP) and the State Advisory Price (SAP). Addressing reporters outside Parliament, she added that mills will be asked to pay the difference between the FRP and SAP. Her statement comes close on the heels of Prime Minister Manmohan Singh's assurance that he would amend the sugarcane pricing ordinance in farmers' interest. Now, the sugarcane pricing bill will be introduced in Parliament on Monday.

What's at stake?

Raw sugar prices have almost doubled this year, with future contracts recording a 28-year high in September. This, farmers say, have not been reflected in the state-controlled sugarcane price. Reports suggest that UP sugar mill owners have agreed to pay Rs 180 per quintal for sugarcane, which is Rs 50 higher than the fair and remunerative price fixed at Rs 129.84 per quintal. Farmers are demanding Rs 280 per quintal and have stopped supplies in anticipation of a higher price.

Farmers have also delayed the start of the crushing season, which usually begins in November. The delay is likely to aggravate the sugar shortage in the country.

Also see: How India cane farmers` protests affect the sugar sector

What is the ruckus all about?

Till last year, the Centre would fix the floor price for sugarcane which the mills would pay farmers. However, some states like Uttar Pradesh, which is also the country's second-largest sugar producer, would declare a higher State Advisory price forcing mills to pay. This led to a series of legal wrangling with the Supreme Court finally deciding in favour of the state. To avoid this mess, the Centre re-jigged the system, shifting the onus of paying the price differences to state governments which set higher prices, and not mills.