Sugarcane Pricing Demands and the Rangarajan Committee Revenue-Sharing Model

Farmer organisations in Karnataka met to formulate joint demands ahead of talks with the state leadership in Belagavi, focusing on structural reforms in sugarcane economics, price fixation, and byproduct revenue sharing.

Key Demands and Economic Proposals

Growers urged the government to increase the Fair and Remunerative Price (FRP) for sugarcane and raise the minimum selling price for processed sugar through transparent benchmarks. A major policy proposal raised was the institution of differential sugar pricing, distinguishing between industrial consumers and household users. The leaders also proposed that all cane prices be calculated on an ex-field basis, requiring sugar factories to absorb harvesting and transportation expenditures rather than transferring them to cultivators.

Additionally, farmers sought the reversal of the Union government's decision regarding the non-procurement of sugarcane-based ethanol, alongside calls for the implementation of a State Advised Price (SAP) alongside the central FRP, referencing models implemented in states like Tamil Nadu.

Relevance of the Rangarajan Committee Recommendations

A core element of the discussions was the operationalisation of the recommendations made by the C. Rangarajan committee on the sugar sector. The committee had recommended treating farmers as partners and shareholders in sugar processing rather than mere raw material suppliers. Key features highlighted in the representation include:

• Byproduct Profit Sharing: Mandating that mills disburse the FRP as a base price while sharing profits earned from value-added byproducts, including ethanol, molasses, and co-generated electricity.
• Digital Accountability: Deploying an open digital monitoring portal to transparently track cane procurement, transport logistics, recovery rate declarations, and clearance of dues to farmers.

For UPSC aspirants, sugarcane pricing remains a critical topic under agricultural subsidies and pricing policies. The structural friction between statutory benchmark prices (FRP), state-directed prices (SAP), and the financial health of sugar mills illustrates the challenges of balancing farm incomes with agro-industrial viability.