At the end of the day, it was probably the acute distress in Uttar Pradesh’s sugar belt that really cost the BJP the Kairana by-poll that captured the public imagination—since all major Opposition parties came together to defeat the BJP, it was seen as a harbinger of what is in store in 2019. To be sure, the Muslim community is numerically powerful in this constituency, with just over a third of the vote, but the fact is that the BJP won here the last time around, even if you assume Muslims will never vote for the BJP. However, the economic woes of the region—cane arrears, agriculture distress, and disastrous livestock regulation—undoubtedly made things tougher for the BJP, apart from the Opposition unifying behind one candidate.
Farm woes are a sign the government needs to get its farm policies right instead of trying to pander to farmers with higher support prices and loan waivers. Had UP chief minister Yogi Adityanath implemented the Rangarajan formula, cane arrears would probably not have hit Rs 13,000 crore in the state. While the Rangarajan formula ensures prices paid to farmers for cane are based on what mills can earn from selling sugar—under the formula, 70% of final realisations are paid to farmers—the UP government chose to stay with the populist state administered price (SAP) that is much higher than the fair and remunerative price (FRP) determined by the Centre. What makes things worse is that, thanks to a slump in sugar prices, mills cannot afford to buy cane at even the FRP—while the government is mulling a hike in the MSP for all crops to 1.5 times the A2+FL cost, the FRP for cane is more than two times the A2+FL costs.
If the raw material alone accounts for 90-100% of the total revenues from sugar, the industry can never be viable. There is little point blaming the mills because divorcing prices from cane economics is simply bad policy. Farmers in UP also suffered as a result of the Prevention of Cruelty to Animals Act (Regulation of Livestock Markets), which hit the livestock and leather trades badly, and vitiated the environment, allowing anti-socials to run amok.
This hit not just the Muslim community, which controls much of the beef trade, but also farmers whose livelihoods depended on cattle farming. Banning trade in animal markets of bulls, buffaloes, steer, heifers and even camels—if these were going to be slaughtered later—meant farmers would have had to bear additional costs on food and shelter for animals that, in the normal course, would have been killed.
Had the courts not stayed the order, farmers would have been saddled with an estimated 15 million cattle and an additional cost of Rs 35,000-odd crore for feeding the cattle, apart from the loss in revenue from the sale of the cattle. At a time when the terms of trade are against agriculture, the government must reduce the clout of the middlemen and help farmers get a better price for their produce—apart from lip service over e-NAM, however, the government has achieved little on this front.