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By Oxfam India
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PracticeSupply Chain

Long Wait, Delayed Returns-Story of Cane Farmers’ Increasing Debt Crisis

UP farmers find it challenging to sell produce due to delay in supply tickets, non-membership in cane societies.

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Long Wait, Delayed Returns-Story of Cane Farmers’ Increasing Debt Crisis
Long Wait, Delayed Returns-Story of Cane Farmers’ Increasing Debt Crisis

Buddhan, a sexagenarian farmer from Western Uttar Pradesh’s Muzaffarnagar had just supplied his sugarcane at the mill gate after spending over two days in a long queue at district’s Rohana Sugar Mill. “All the debts will be paid,” must have been his last thought before he crashed at the mill gate—his body stiff and immobile in December cold.

“We tried to save him but he was old and had nothing proper to eat in last 50 hours or so,” said Rakesh another farmer at the mill who witnessed the sad turn of events. Such anecdotes of apathy are not uncommon at the sugarcane mill gates, finds Oxfam India’s study- Human Cost of Sugar.

“There’s so much rush at sugar mills—people, cattle, cycles and tractors—but no amenities,” he said that no action has been taken by the mill authority despite farmers raising the issue multiple times. Several others interviewed by Oxfam during the study said that in most of the cases, mills don’t even have clean and functional toilets or any resting place for the farmers.

Despite sugar being the largest agricultural commodity produced in the Northern state, lack of transparency in the supply-chain practices makes it challenging for the farmers—especially marginal and small farmers—who depend largely on sugarcane- their primary produce. In the five districts studied—Meerut, Saharanpur, Muzzafarnagar, Lakhimpur Kheri and Bareilly—sugarcane is primary source of income for 67% of the marginal farmers and 95% for the small farmers.

Long Wait, Unfair Returns

Like Rakesh, many farmers battle cold and hostility as they head to mills ever year to supply cane in hope of better returns. However, the study found that most of the farmers are unable to sell their full produce to the mills due to delay in supply tickets, non-membership in cane societies and delay in payment from mills.

Another farmer Pradeep had supplied most of that produce to the local sugar mill, but reported having not received any payment till the beginning of next sowing season. “We were holding parchis (payment slips) since November, but no payment had been made by the sugar mill,” he said.

Payment for the sugarcane from sugar mills is protected from market volatility by the state advised price (SAP) – the minimum price above the cost of production that the sugar mills must pay cane farmers. However, sugar mills are infamous for delaying payments several months, and sometimes even years. Small and marginal farmers, who are in desperate need of cash, often sell some of their produce in the open market at local jaggery producing units – or kolhus. At times, they are forced to sell their produce to big farmers in lack of any other opportunity at a fraction of the SAP.

In addition to these, discrepancies in cane weighing process and deductions were also detected at several mills. In Meerut, a Centre-in-Charge (requested anonymity) explained that the sugar mills deducted money from their salaries if the cane gets decayed or has leaves. Even though the mills are responsible for carrying the canes from the collection centres to the mill gates, the process is often delayed due to unavailability of transport. “Any such delay results in a weight deduction up to 5% of the total cane being supplied by them to the mills. As a result, we are left with no option but to compensate for it by deducting a standard 2%-5% from the total weight of sugarcane supplied by each farmer,” he said.

Vicious Debt Cycle and Defunct Grievance Redressal

Lack of land ownership also impacts a farmer’s ability to borrow money. Cut off from institutional credit services, smallholder farmers must borrow money from local money lenders at much higher rates of interest. Paying full price for inputs, receiving lower payment for cane, and working furiously to pay back borrowed money under harsh lending terms causes an interminable cycle of debt. “We get peanuts or nothing in return; most of the produce goes in pay back. At times we don’t even have enough money for sowing season. We are just surviving,” laments Pradeep. But there’s no way out, he says because “Where do we go? Who will address our situation?”

Three key grievance redressal platforms for farmers Trade Unions, Cane Societies and Sugar Mills were found inadequately dysfunctional for small and marginal farmers during the course of study. Women farmers felt completely left out in such processes without their representation.

(Names have been changed to protect identities)