Even as the Central government has decided to give a boost to the cooperative sector by creating a separate Ministry of Cooperation, the birthplace of the sugar cooperative, Maharashtra, is witnessing a reverse trend.
The cooperative sugar sector has witnessed a steady decline, paving the way for private mills. The share of private sugar mills in the State has gone up from 25 per cent in 2010-11 to 50 per cent in 2020-21. Interestingly, many loss-making cooperative mills led by politicians have turned profitable after these mills were privatised and taken over by the same politicians or their relatives.
Sugar sector reforms need ‘political will’
About 164 sugar mills crushed sugarcane in 2010-11. Out of these, the number of private mills was 41 (25 per cent). In the recently concluded 2020-21 sugarcane season, 190 sugar mills were operational out of which 95 (50 per cent) were private mills. Expert say that the number of operational cooperative sugar mills will further decline in the next few seasons owing to the financial crisis faced by these mills.
Privatisation by auction
Vitthalrao Vikhe Patil is credited with starting the first cooperative sugar mill in Asia. He organised farmers in the Pravanagar area of Ahmednagar district way back in 1948 and establish a cooperative sugar factory, which was commissioned in 1950. Since then Maharashtra has witnessed the surge of sugar mills and sugar politics.
India to play key role in higher global sugar output next season
In recent years, besides private players who are venturing into the sugar industry, politicians have taken a keen interest in privatisation. Various agencies and court cases are on board against the Maharashtra State Cooperative Bank (MSCB) and the Enforcement Directorate claims that MSCB directors who belong to all political parties approved loans to sick cooperative sugar mills run by politicians. After mills defaulted on the loans, the auction was carried out to recover the loans. But the majority of the mills were purchased by politicians and their relatives at a throwaway price. Social activists Anna Hazare, farmer leader Raju Shetti and others have alleged that MSCB again gave loans to politicians to make mills operational.
This privatisation by auction continues for the last few years and in August 2019, the Economic Offences Wing of the Mumbai police registered a cheating case against MSCB officials and the ED registered a money laundering case against 76 former directors of MSCB.
Many cooperative sugar mills that were incurring losses were not privatised but were handed over to private operators. “It is a fact that sugar mills are the lifeline of politics in Maharashtra. Some of the biggest sugar mills in South Maharashtra were exploited by politicos and now they have given reins of their mills to private players on contract. You can understand why loss-making sugar mills become profitable once they are privatised,” said one of the directors of a Sangli-based sugar mill.
Anna Hazare says that cooperative sugar mills are facing a financial crisis because of corruption and the diversion of money into politics. Not surprisingly, more than 100 sugar barons contested the 2019 State Assembly polls as candidates of all major political parties.