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An Oxfam study, “Human Cost of Sugar: A farm-to-mill assessment of sugar supply chain in Uttar Pradesh”, conducted in 58 villages across 5 districts of Uttar Pradesh – Meerut, Saharanpur, Bareilly, Lakhimpur Kheri and Muzaffarnagar – has found that sugarcane cultivation is the primary source of income for 67% of the marginal and 95% for the small farmers, but as high as 60% of the farmers, said that their basic quota of sugarcane supply is usually less than their actual produce by anywhere between 150-220 quintals.
Pointing out that because of faulty surveys resulting in decreased incomes by Rs 48,000 to Rs 72,000, the study said, published last year, 70% -90% of the farmers are often forced to sell the cane to local jaggery producing units at lower price due to delays in receipt of supply tickets, while 90% of the farmers face unfair weighing of cane at the mill gates or collection centres.
Excerpts:
Farmers in the 5 districts have a high income dependence on sugarcane cultivation. It is the primary source of income for 67% of the marginal farmers and 95% for the small farmers. Marginal farmers owing their small land holding cannot be dependent solely on sugarcane cultivation for cover living expenses. They are therefore engaged in agricultural and non-agricultural wage labour alongside.Data indicate that for 67% of the marginal farmers the primary source of income is sugarcane cultivation as against the 95% of the small farmers remaining marginal farmers are deriving their primary income from agricultural labour (22%), nonagricultural labour (8%) and small business (3%).
Of the total number of smallholder and marginal farmers interviewed the study indicated that 22% of the marginal farmers opted for agricultural labour alongside sugarcane cultivation as a secondary source of income. 11% of the marginal farmers were engaged in non-agricultural labour, as a secondary source of income mostly in construction work, while 3% also ran small businesses. 95% of the small farmers were engaged only in sugarcane cultivation.
Most of the small and marginal farmers are unable to sell their full produce to the mills every year due to delay in supply of tickets, non-membership in cane societies (when cultivating on tenancy land) and delay in payment from mills. These challenges force them to sell their cane to the local informal jaggery producing units known as kolhus at rates that are 40% - 50% lower than the SAP, thereby decreasing their income from sugarcane cultivation.
Gaps in annual sugarcane survey
An annual survey of sugarcane cultivation is conducted by the cane societies to provide an estimate of sugarcane production. The study found that in some villages in Bareilly, Saharanpur and Lakhimpur Kheri districts the survey is not conducted and the data is collected from a few farmers. Some small and marginal farmers complained that the officials completed the survey by just meeting the village Sarpanch.The respondents also shared that often the average yield of the last 3 years is used to calculate the estimate quota of supply for a village. Farmers are assigned basic quota of cane supply based on these surveys. These process gaps significantly affect the actual estimates of production and small and marginal farmers most often get left out.
For any additional area that has been brought under cultivation the mills are required to issue a bond to the farmers implying that they will be procuring the additional produce of the farmers for crushing in the coming season and which increase the basic quota of the farmers for the coming year, however the process is flawed most of the times in absence of timely issuance of supply tickets they are forced to sell the produce to local jaggery making unit. As high as 60% of the farmers from our sample in Bareilly mentioned that there is significant difference between their actual production and the basic quota of cane supply assigned to them.
The cane society has recently started promoting the use of GPS enabled systems to enumerate the size of the land in order to maintain accuracy. However, the entire system is prone to errors and often leads to discrepancies. The study found that difference between actual production and the basic quota ranges between 150-220 quintals.
Farmers are forced to sell their produce beyond their basic quota to middlemen or local jaggery producing units or Kolhus thereby resulting in loss of income between Rs 48,000 and Rs 72,000 depending on cane variety.
The study found that there are delays in issuing the supply tickets and the existing communication mechanisms are not effective. Marginal farmers found it most challenging to plan their harvest and rely on word of mouth information. Marginal farmers are unable to hire farm workers for harvesting and therefore start harvesting sugarcane a few days prior to the expected supply date.
Other farmers in contrast can hire workers to do the harvesting after knowing the exact supply date. The study found that 70% - 90% of the marginal farmers are forced to sell their cane to Kolhus at 40% - 50% lower prices because of delays in receiving supply tickets after harvest. Debt burden among marginal farmers reduces their ability to hold their harvest for supply tickets and force them to go for the distress selling to Kolhus.
According to the study, 40% - 50% of the marginal farmers supply their cane to the mills using supply tickets of other farmers which they mutually adjust later when their own tickets arrive. While in many cases this was done as a mutual understanding and cooperation among farmers this also gives rise to prevalence of ‘cane mafia’ as was found during the study in some places in Bareilly.
During the study some farmers in Lakhimpur Kheri, Saharanpur and Muzaffarnagar shared that there have been incidents of corruption where false supply tickets were issued to big farmers. Since the mills have a fixed quota for cane, any additional ticket issued to one farmer reduces the number of supply tickets for other farmers.
Farmers shared that in such cases it is the marginal and small farmers who lose out to influential big farmers. The farmers also shared gaps in the process of handing over of the tickets. The study found that all supply tickets for a village are often handed over to one farmer and incidents of losing supply tickets are common.
Delays in receiving cane supply tickets
Farmers plan their sugarcane harvest based on the supply tickets issued to them by the sugar mills. This is a time sensitive process because a gap in harvest and supply would result in lesser sugar recovery of the crop and a late harvest would result in the farmer missing the procurement window also, this leaves the farmer with a comparatively lesser window for the sowing of the next season crop.The study found that there are delays in issuing the supply tickets and the existing communication mechanisms are not effective. Marginal farmers found it most challenging to plan their harvest and rely on word of mouth information. Marginal farmers are unable to hire farm workers for harvesting and therefore start harvesting sugarcane a few days prior to the expected supply date.
Other farmers in contrast can hire workers to do the harvesting after knowing the exact supply date. The study found that 70% - 90% of the marginal farmers are forced to sell their cane to Kolhus at 40% - 50% lower prices because of delays in receiving supply tickets after harvest. Debt burden among marginal farmers reduces their ability to hold their harvest for supply tickets and force them to go for the distress selling to Kolhus.
According to the study, 40% - 50% of the marginal farmers supply their cane to the mills using supply tickets of other farmers which they mutually adjust later when their own tickets arrive. While in many cases this was done as a mutual understanding and cooperation among farmers this also gives rise to prevalence of ‘cane mafia’ as was found during the study in some places in Bareilly.
During the study some farmers in Lakhimpur Kheri, Saharanpur and Muzaffarnagar shared that there have been incidents of corruption where false supply tickets were issued to big farmers. Since the mills have a fixed quota for cane, any additional ticket issued to one farmer reduces the number of supply tickets for other farmers.
Farmers shared that in such cases it is the marginal and small farmers who lose out to influential big farmers. The farmers also shared gaps in the process of handing over of the tickets. The study found that all supply tickets for a village are often handed over to one farmer and incidents of losing supply tickets are common.
Discrepancy in cane weighing process and weight deductions: The study found 90% of the small and marginal farmers feel that the cane weighing process at the mill gates or the mill run collection centres are faulty. Most of the farmers shared that there is a major difference in the weight of cane when measured at private weighing scales as compared to mill collection centres.
The study also found that it is a general practice for mills to deduct 2% - 5% from the actual weight supplied to adjust potential loss of recovery due to drying. Farmers shared that the deduction of weight is inconsistent and unfair given that the potential loss of recovery is due to the delays at the end of the mills and not because of the farmers.
The study found that 60% - 70% of the farmers reported having received the payment for the sugarcane sold to the mills in 2016 crushing season only in October 2017. Farmers also reported an incident where 5 private mills across the 5 districts closed down without paying the farmers their dues.
Of the total number of farmers surveyed only 40% of the farmers said that they have received payments within two of supplying the cane. None of these farmers received any interest against the delayed payments from the mills as mandated by the law according to which the mills are mandated to make payments 14 days of cane purchase from farmers, failing which 15% annual interest is charged on the due amount for the period of delay.
As on March 31, 2018, cane arrears in Uttar Pradesh stood at over Rs 120 billion, recording the highest ever in the country. This was believed to be because of a sharp fall in sugar prices in the domestic as well as the global market. This was also due to surplus availability of 4.5 million metric ton of sugar over and above the required closing balance during the current 2017-18 season in India.
Payment made to the daily wage workers is highly discriminatory of gender with a significant variation in the amount of wages paid to men and women workers. Male workers get paid Rs 300 to Rs 400 per day and women are paid up between Rs 80 to Rs 200 per day for the same work.
The farm workers whether hired directly by the farmers or through third party labour contractors or agents were always paid much lower than the State Government prescribed minimum wages. There is often a shortage of labour especially during the harvesting season, due to migration. Depending on such factors, the study showed that the wages vary between Rs 200 to Rs 400 for men and Rs 80 to Rs 200 for women as against the state government specified
minimum wages of Rs 293,Rs 322 and Rs 361 for unskilled, semi-skilled and skilled workers. These workers are dependent on their daily income which aids the sustenance of their households. However, the study found that as high as 81% of the farm workers are not paid on the same day, and experience a delay of up to 10 – 15 days.
In some instances, the farmers also deduct money from the workers’ payment if the mill does not pay the full amount because of decay of cane or that the canes have leaves remaining on them. Unfair weight deductions on part of the mills in turn affect both the farmers and the workers.
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Click here to download study
The study also found that it is a general practice for mills to deduct 2% - 5% from the actual weight supplied to adjust potential loss of recovery due to drying. Farmers shared that the deduction of weight is inconsistent and unfair given that the potential loss of recovery is due to the delays at the end of the mills and not because of the farmers.
Severe delay in release of cane payments by the sugar mills
One of the key concern that came forth across all 5 districts was the sever delay in receiving payments against the supply of cane. According to the Uttar Pradesh Sugarcane (Regulation of supply and purchase) Act 1953, all sugar mills are supposed to clear payments to farmers within 14 days of purchasing cane, else pay an interest of 15% on the principal amount.The study found that 60% - 70% of the farmers reported having received the payment for the sugarcane sold to the mills in 2016 crushing season only in October 2017. Farmers also reported an incident where 5 private mills across the 5 districts closed down without paying the farmers their dues.
Of the total number of farmers surveyed only 40% of the farmers said that they have received payments within two of supplying the cane. None of these farmers received any interest against the delayed payments from the mills as mandated by the law according to which the mills are mandated to make payments 14 days of cane purchase from farmers, failing which 15% annual interest is charged on the due amount for the period of delay.
As on March 31, 2018, cane arrears in Uttar Pradesh stood at over Rs 120 billion, recording the highest ever in the country. This was believed to be because of a sharp fall in sugar prices in the domestic as well as the global market. This was also due to surplus availability of 4.5 million metric ton of sugar over and above the required closing balance during the current 2017-18 season in India.
Working condition and challenges faced by farm workers
For daily wage workers in sugarcane cultivation, it’s their secondary source of income. 80% of the workers are engaged in agricultural labour work for other crops like wheat and vegetables. Remaining 20% take up jobs in nearby cities or towns majorly for construction work or in the brick kilns near their respective villages as a primary source of income.Payment made to the daily wage workers is highly discriminatory of gender with a significant variation in the amount of wages paid to men and women workers. Male workers get paid Rs 300 to Rs 400 per day and women are paid up between Rs 80 to Rs 200 per day for the same work.
The farm workers whether hired directly by the farmers or through third party labour contractors or agents were always paid much lower than the State Government prescribed minimum wages. There is often a shortage of labour especially during the harvesting season, due to migration. Depending on such factors, the study showed that the wages vary between Rs 200 to Rs 400 for men and Rs 80 to Rs 200 for women as against the state government specified
minimum wages of Rs 293,Rs 322 and Rs 361 for unskilled, semi-skilled and skilled workers. These workers are dependent on their daily income which aids the sustenance of their households. However, the study found that as high as 81% of the farm workers are not paid on the same day, and experience a delay of up to 10 – 15 days.
In some instances, the farmers also deduct money from the workers’ payment if the mill does not pay the full amount because of decay of cane or that the canes have leaves remaining on them. Unfair weight deductions on part of the mills in turn affect both the farmers and the workers.
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Click here to download study
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