Profit-sharing formula in sugarcane pricing introduced in Belagavi district of Karnataka farmers

The Belagavi district administration managed to introduce a profit-sharing formula in the pricing of sugarcane for this crushing season. Most farmers’ leaders welcomed the formula.This has succeeded in breaking the deadlock between sugarcane farmers and factories, allowing commencement of operations in sugar factories.District In-charge minister Satish Jarkiholi has claimed that this was the first in the country where the profit sharing formula was introduced according to the C Rangarajan committee recommendations.Most of the farmers leaders have accepted this formula and suspended their protest. On Friday, eight out of the 29 factories in Belagavi district issued notices, saying they were starting crushing operations and would abide by the formula.Some leaders, like Shashikant Padasalagi Guruji have expressed their displeasure at the formula, saying it was speculative and dependent heavily on the union government’s efforts at revising the Minimum Selling Price of sugar.The agreement was hammered out between Satish Jarkiholi, former minister Shashikant Nayak, Rahul Shindhe, in charge Deputy Commissioner, sugar factory representatives and some farmers leaders. The minister clarified that the issues of Minimum Selling Price of sugar, Fair and Remunerative Price of sugarcane and the State Advised Price to be decided by the state government were all issues that could be discussed at a later date.The formula is based on the understanding that farmers are both raw material suppliers and share holders of factories. It involves an agreement that farmers will be paid a base price, that is above the Fair and Remunerative Price fixed by the union government and an additional amount that is given out as profit. It is not mandatory and could be irregular.The profits will be calculated in such a way that 75 percent shall go to farmers and 25 percent to the factory.Mr Shindhe said that the ₹ 3650 per tonne offered by the factories as the base price, was around ₹ 350 higher than the prices paid last year.The details regarding the sugarcane payment are as follows: According to the agreement, ₹3,500 per tonne will be paid as the first instalment. Once the crushing season concludes, an additional ₹100 will be provided as a second instalment.Additional payments will depend on the increase in sugar prices. If the average market price of sugar exceeds ₹45 per kg before the start of the crushing season, the final installment of payment will be calculated based on this rate. The agreement specifies a pricing structure: if the average price of sugar is ₹48 per kg, the price for sugarcane is set at ₹3,650 per tonne; at ₹49, it is ₹3,750; at ₹50, it is ₹3,850; and at ₹55, it is ₹4,350. After deducting the ₹3,600 already paid, the remaining surplus amount will be shared—75% going to the farmers and 25% to the sugar factories.To a query, Satish Jarkiholi said that the factories would be inspired to share profits if the union government fixed a MSP higher than the current one at Rs 31 per kilogram. ``Market prices are not reliable. They increase one day, only to fall the next. A revised MSP, however, will stabilise prices and pull the factories out of risk,’’ he said.Chunappa Pujeri, Karnataka Rajya Raitha Sangha and Hasiru Sene leader, said that farmers would benefit by the profit-sharing formula and the lump sum of ₹ 3600 to be paid to farmers irrespective of the market prices. He said that the farmers had climbed down from their demand of ₹ 5500 per tonne, only because farmers were already suffering due to severe drought conditions, heat, drying sugarcane, delayed commencement of factory operations, and potential loss of yield.However, Mr Guruji does not approve of the formula. ``It is nothing but a pie in the sky, as it is dependent on whether Pralhad Joshi, union food minister, decides to hike the sugar MSP or not. We will celebrate the agreement only after the farmers get at least ₹ 4000 per tonne,’’ he told farmers in Gurlapur on Friday.Mr Shindhe has appealed to farmers to only go by the formula announced by the minister in the meeting and not to believe other claims made on some social media platforms. He also appealed to farmers leaders to allow factories to start crushing operations so that farmers do not suffer further losses.