Stir jeopardises co-ops' takeover

The sick co-operatives are taken over by private sugar factories in order to improve them and keep both the previous management and sugarcane farmers happy.

But the private company's management has its own working style and cane price being dependent on profitability cannot be increased in response to cane growers' demand.

This has created a crisis for both the 'Indira Gandhi Mahila Sahakari Sakhar Karakhana (IGMSSK) at Tambale in Kolhapur district and Godavari Sugar Mills (GSM) of the Somayya Group.

While farmers in the factory area are members of IGMSSK, they are merely cane suppliers to GSM, which has agreement for crushing cane and maintaining the machinery and other operations.

Under the lease agreement, GSM is only to pay the rent to IGMSSK and is not bound to follow other co-operatives with regard to sugarcane price and tackle farmers' agitation.

Regardless of this, the farmers in the area have launched an agitation demanding additional price for the cane supplied in the last crushing season. The unrest has taken such a serious turn that they have locked the IGMSSK office and submitted a memorandum to cane supply officer N M Patil demanding the payment of the second and further installments.

The farmers say the factory management has paid only the first installment of Rs1200 per tonne and failed to make the final installment.

IGMSSK has gained a lot of popularity both at the national and regional levels for being the first sugar co-operative in the country with all women directors.

But after a few seasons the factory ran into trouble in the face of mounting debts and soon turned sick when GSM took it over under a five-year lease agreement. The co-operative is expected to increase its share capital and secure an adequate cane supply.

Under the agreement, the farmers who are shareholders in the factory, have become cane suppliers. Consequently, they are bound to accept whatever price fixed by GSM for their sugar cane.

When asked to comment on the farmers' agitation and their demand for additional price, GSM chief executive officer D S Gurav said as much and reasoned that the company was paying as per the recovery criterion at Rs 100 per tonne.

According to him, the payment of Rs 1200 per tonne, in fact, is more than the recovery rate, which is 11 percent. Such being the case, there is no question of paying any additional amount, he said.

IGMSSK gets a rent of Rs 3 crore from GSM as per the agreement and is responsible to settle all the dues to the farmes, says Gurav adding that the price to be paid for sugar cane is fixed by his company's board of directors on the basis of profitability.

The GSM management's firm stand is causing a lot of heartburn among the farmers who feel that the price they are getting is much less than what is being paid by other cooperatives.

The agitation may make other private factories think twice before bidding for takeover of sick cooperatives on the brink of closure.