Sweetening the deal: Farmers may get Rs 6,000 per acre to shun sugarcane farming

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New Delhi | Updated: September 9, 2019 7:11:10 AM

Given the ever-rising fiscal burden and depletion of water tables owing to farmers in areas with low irrigation coverage choosing to cultivate water-guzzling crops, a government panel is considering recommending special incentives to dissuade farmers from growing sugarcane in water-scarce areas.

The reason for farmers in water-scarce regions sticking to sugarcane farming is the support prices, assured market and profitability ensured by the Centre and state governmentsThe reason for farmers in water-scarce regions sticking to sugarcane farming is the support prices, assured market and profitability ensured by the Centre and state governments

Given the ever-rising fiscal burden and depletion of water tables owing to farmers in areas with low irrigation coverage choosing to cultivate water-guzzling crops, a government panel is considering recommending special incentives to dissuade farmers from growing sugarcane in water-scarce areas.

According to an official source, the task force headed by NITI Aayog member Ramesh Chand – which has been tasked with finding long-term solutions such as crop diversification to reduce adverse impact of inefficient sugarcane cultivation on ground water and aligning India’s sugar industry with global markets — may propose an incentive of Rs 6,000/acre for farmers in a year to not grow cane in states like Uttar Pradesh and Maharashtra. The idea is to bring down area under sugarcane cultivation by about 20% or thereabouts, the source told FE. On an average, over 48 lakh hectare of cultivable land has been under sugarcane farming in the last five years.

In 2018-19, the cane area was 55 lakh hectare. In terms of area under sugarcane cultivation, UP tops with 22 lakh hectare, followed by Maharashtra (9 lakh hectare), Karnataka (4 lakh hestare) and Bihar (2.5 lakh hectare).

The reason for farmers in water-scarce regions sticking to sugarcane farming is the support prices, assured market and profitability ensured by the Centre and state governments. Even as large parts of the country witness acute water scarcity and depletion of water tables, agriculture consumes a disproportionate more than three-fourths of the country’s fresh water resources. And 60% of irrigation water is used for rice and sugarcane, the two most water-guzzling crops.

While the Centre has been helping the sugar industry clear cane dues in recent years through packages, including loans and interest subsidy, the steps have failed to prevent arrears from piling up at regular intervals when sugar prices drop, thanks to generous and unreasonable hikes in cane prices by both the Centre and states like UP. On top of that, the food ministry last year reintroduced the sales quota system from June, impeding mills’ ability to cut inventory and clear cane arrears fast.

Cane dues stood alarmingly high at Rs 17,518 crore as of mid-July this year, with UP alone accounting for 57% of arrears. On August 28, the Centre announced a Rs 6,268-crore subsidy for export of six million tonne of sugar during the 2019-20 marketing year starting October in order to liquidate surplus domestic stock and help mills clear huge sugarcane arrears to farmers.

On Tuesday, the Centre hiked prices of ethanol, meant for blending with petrol, for 2019-20 to help cut surplus sugar production. The Centre is targeting to achieve 10% of ethanol blending with petrol by FY22 from about 7% in FY20. A working paper by Icrier last year (by Ashok Gulati and Gayathri Mohan) discussed the issue in detail and called for a paradigm shift in water use for agriculture, with the objective of shifting water-intensive crops to regions where the natural resource is abundant. Farmers in Maharashtra, despite the state’s abysmally-low irrigation coverage (18%), choose water-guzzling sugarcane over other crops like cotton, tur and groundnut which produce higher value of output per unit of irrigation water, the paper pointed out.

The 13-member task force was formed on December 13 2018; it includes secretaries of food, agriculture, expenditure, commerce, petroleum and environment.

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