Reuters/New Delhi
Tens of thousands of Indian farmers protesting against low state-set sugarcane prices forced the adjournment of first day of parliament yesterday, prompting the prime minister to consider changes in fixing cane prices.
Farmers from Uttar Pradesh, India’s biggest cane producing state, marched through central Delhi, causing traffic chaos. A farmer union representative said 50,000 demonstrators filled the streets, while authorities put the figure at half that.
The protests had an immediate effect, with Prime Minister Manmohan Singh saying there would be possible changes to the price mechanism after a meeting with Rahul Gandhi, general secretary of the Congress party.
The ruling Congress party asssured cane growers of Uttar Pradesh of “highest possible” cane price.
The protest, which was backed by opposition parties and unions, led the government yesterday to discuss a compromise with the protesters, a sign of how difficult it may prove to reform heavily-regulated sectors such as sugar and insurance. The protest, highlighting rural discontent over government policy, may delay cane crushing in Uttar Pradesh and further worsen shortages of sugar, forcing the country to import more supplies.
Shortages this year in India, the world’s top consumer and second biggest producer, has already led to import contracts for 5 million tonnes of raw sugar and more 300,000 tonnes of white, pushing benchmark New York prices to nearly 29-year highs. The federal government has given states greater autonomy in fixing sugarcane prices, one of India’s biggest cash crops, in order to lift restrictions on the heavily regulated sugar sector.
“We demand at least 215 rupees as the cane price,” said Anil Singh, national secretary of the National Alliance of Farmers’ Associations. “How can farmers supply cane to mills unless the price issue is resolved?”
Singh said that until the price issue was resolved, the cane crushing scheduled to due to start last month would be delayed further.
The Congress-led coalition won re-election with a stronger mandate in May, raising hopes of quick reforms, but it has moved slowly and is still answerable to a reform-shy rural base.
Indian spot sugar snapped a four-day winning streak yesterday, partially on hopes the federal government would resolve the cane dispute in northern Uttar Pradesh state, dealers said. Many farmers are unhappy with state-set prices, saying they benefit sugar firms. India’s government has set a series of reforms ranging from the financial sector to law and order and gender equality as priorities for the winter parliament session. Investors are following whether Prime Minister Manmohan Singh will follow up on his pledge to push ahead with difficult financial reforms, particularly in the insurance and pension sectors.
The state government has fixed the price the mills must pay to farmers at 165-170 rupees ($3.55-$3.66) per 100 kg, and farmers have been seeking a higher price that corresponds more to the rise in retail prices. The delay in crushing would affect early sowing of wheat, the country’s main winter sown food crop, said Sudhir Kumar Panwar, head of a farmer lobby group Kisan Jagriti Manch.
Sugar output in Uttar Pradesh is likely to fall below estimates as the weakest monsoon in more than three decades has hit sucrose content in cane.
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