In a move that could help millions of farmers and bore a hole in the pockets of sugar producers, the Union Food Ministry has started work on a plan to do away with reservation of sugarcane area for mills.
At present, sugarcane farmers can sell only to that mill in whose area their fields are located. But this could change soon.
"An amendment to the Sugarcane Control (Order) will take away from state governments the power to reserve sugarcane areas. We are working on it and it may be done in another year," said a food ministry official.
Such a step will open up competition among sugar mills and ensure better prices for farmers. Under the rules, farmers have no choice but to supply to the mill they are attached to even if it defaults on payments. Almost 50 million rural households earn their livelihood from the sugar industry.
The sugar industry has for long lobbied hard against such a move on the grounds that it will take away from them sugarcane areas they have developed over decades. But some companies have argued for doing away with the reservation.
However, the amendment will not apply to Uttar Pradesh, the country's second largest sugar-producing state, which has its own Act
