Sugar Co-operatives in Maharashtra: A Political Economy Perspective

Abstract

The origins of the powerful sugar lobby in Maharashtra date back to the 1950s. Post Independence, cooperatives formed an integral part of the Congress vision of ‘rural development with local initiative’. A ‘special’ status was accorded to the sugar cooperatives and the government assumed the role of a mentor by acting as a stakeholder, guarantor and regulator. Persistence of the maze of regulations instituted five decades ago, despite its stated rationale being thwarted, suggests that it is maintained by entrenched vested interests. This paper calls for a fresh start with minimal regulations. The teething problems and initial market failures that may occur cannot be worse than the continuing saga of government failure.

Acknowledgements

This research study was assisted by a grant from the South Asia Regional Fellowship Program of the Social Science Research Council with funds provided by the Ford Foundation. It is indeed a great pleasure to thank everyone who helped me in this endeavour (the list being fairly large). A very special thanks to Dr Abhay Pethe for his invaluable comments, suggestions and especially his patience. Dr Ajit Karnik too gave me a patient hearing on several occasions and some very valuable inputs – a very special thanks to him. Dr Romar Correa, Dr Avdhoot Nadkarni and Dr Neeraj Hatekar were not spared the onslaught. For all the discussions we had – a sincere thanks to all of them. Dr Manisha Karne and Ms Sandhya Mhatre helped me tide over the language roadblock and understand technical terms and articles in Marathi. At the office of Commissioner Sugar, Pune Mrs Alka Pawar, Mrs S. Iyyer; at the Vasantdada Sugar Institute Mrs Seema Joshi and Mr Pathan all helped me with important resource material and data. The library staff at the Gokhale Instititute, Pune were very welcoming. I wish to thank them all. I wish to thank the TISS, Mumbai for granting me institutional affiliation during the tenure of the fellowship as was mandated by the TOR of the SSRC and Mumbai University for the leave granted to me. Sincere thanks to Dr Dilip Mookherjee and Dr Sanghamitra Das, who were kind enough to share with me their data set and answer several queries relating to it. Detailed comments from two anonymous referees has helped improve the paper tremendously – a very sincere thanks to them. Finally, needless to say, the responsibility for any errors that may remain is solely mine.

Notes

1. Pune, Dhule, Jalgaon, Nashik, Ahmednagar, Solapur, Sangli, Kolhapur and Satara districts comprise Western Maharashtra; and Beed, Aurangabad, Jalna, Nanded, Osmanabad, Parbhani, Akola, Amravati, Buldhana, Yavatmal and Wardha districts are Eastern Maharashtra.

2. Recovery rate refers to the amount of sugar obtained as a percentage of sugarcane crushed that is, the amount of finished product obtained per unit of raw material.

3. Obtaining a data series such as actual cane price, which should have been readily available on the public domain required several visits to the office of Commissioner Sugar, Pune. After several requests and applications we managed to obtain the data for only six years.

4. Accessed at: www.eci.gov.in

5. Updated information on this figure was not made available despite repeated requests to various officers.

6. No explanation is provided on the website as to what the financial categories listed include or do not. Via personal communication it was ascertained that ‘govt. dues’ did include guarantee fees due but did not include government overdues in the form of purchase tax deferrals, outstanding guarantees. The figure thus serves as an approximate magnitude of government involvement.

7. We were informed that not all the factories for which financial data was available on website were, in fact, operational in the season 2003/2004.