The economic and political influence of sugar cooperatives in Maharashtra
Sugar, it would seem, has sweetened the lives of many politicians in Maharashtra. But, it has left a bitter taste in the mouths of their less fortunate opponents.
Eyes mocking, tone bantering yet slaked with contempt, the chairman of a sugar factory in rural Maharashtra said: "EvenBrahma, Creator of the Universe, cannot ignore the sugar cooperative movement in Maharashtra."
Arrogance? Perhaps. Fact? Certainly. The omnipotence of Maharashtra's sugar barons is, to some, a political scandal. To others, the "politics of sugar" is largely a myth - created and diffused in the media and the public imagination by political quacks.
Whatever the reality, the economic and political influence of sugar cooperatives in the state is unmatched by any other single non-government agency.
'Sugar' has made and unmade countless politicians - including chief ministers. Paradoxically, the last chief minister, Vasantdada Patil, himself a sugar dada, suffered his political demise in spite, rather than because, of his sugar connections.
The sugar barons, several of whom India Today met recently, dismiss the concept of "sugar politics" as "cheap talk". Facts suggest otherwise.
Big Stakes: According to one self-confessed sugar king, nearly a dozen MLAs in the state Assembly are themselves chairmen or members of sugar cooperative factories. Many more have been elected to legislative offices with the aid of the financial muscle-power, and political clout of rich sugar farmers, whose personal political aspirations may be small but stakes in the politico-economic power structure are big.
Maharashtra is the sugar bowl of the country. In 1976-77 it produced 15.6 lakh metric tonne of sugar - nearly a third-of India's total output. More than 5,00,000 acre are under sugarcane farming and by the mid-1980s production is expected to almost treble.
The sugar industry had a late beginning in the state. It was only in 1930 that the first sugar factories (privately owned) were established. With supply exceeding demand sugarcane farmers were forced to sell their crop to the factory owners at unprofitable rates - or not at all.
New Exploiters: Exploitation of small farmers by private sector sugar factories (some of which were, and still are, owned by big industrial houses) led to the cooperative movement. The programme was initially designed to liberate small farmers from the clutches of landlords and capitalists. Unfortunately, the landlords and capitalists were soon replaced by an even more avaricious breed - politicians.
The first cooperative sugar factory was inaugurated in Pravaranagar, Ahmednagar district, in 1950. Today there are 56 such factories - and the projected figure for 1985-86 is 100. The total turnover of the cooperatives exceeds Rs 360 crore, making it one of the largest industries rural Maharashtra.
With sugar cooperatives burgeoning all over Maharashtra, the joint-sector (private) sugar factories found their share of the industry being gradually whittled away. Competition between the two groups inevitably sharpened and, equally inevitably, the more "democratic" and populist cooperatives emerged victors.
Presently, cooperative sugar factories account for 85 per cent of the state's total sugar production. More significantly, the 56 cooperatives produce 28 per cent of the country's, and two per cent of the world's, sugar. "Only 10 countries in the world produce more sugar than the Maharashtra cooperatives," gloats one cooperative boss.
The state's 10 private sector sugar companies are predictably bitter about the cooperatives' success. Alleges the managing director of one private company: "The cooperatives want to destroy us." The joint-sector factories also charge the cooperatives with under pricing, bribing and political manoeuvring.
Facade: In theory, sugar cooperatives are democratically managed; the small farmer is paramount and he participates fully in decision-making. In practice, it doesn't quite work that way. The membership of an average factory is 5,000. The criterion for membership: being a sugarcane farmer with a minimum holding of half an acre (equivalent to a Rs 500 share in the factory). The maximum holding is Rs 10,000 per member.
Elections are held every three years. Each cooperative member has one vote - irrespective of his shareholding. The members of each constituency elect one director. Depending on the size of the factory, upto 20 directors are elected for terms varying between three and five years. The directors then choose the chairman and vice-chairman.
It has been alleged by the Indian Sugar Mills' Association (ISMA) that "elections to the boards of directors of the cooperative sugar factories in Maharashtra have become as costly as elections to Parliament. Candidates spend huge amounts to get themselves elected to the boards of directors."
According to M.S. Marathe, managing director of the Maharashtra Rajya Sahakari Sakhar Karkhana Sangh, a federation of sugar cooperatives, "a sugar factory with a crushing capacity of 1,500 tonne requires a rupees six crore investment". Of this rupees one crore is usually raised by the entrepreneur from small sugar farmers (say, 10,000 farmers, contributing Rs 1,000 each). Another one crore is obtained from the state Government and the remaining four crore from long-term bank loans.
Real Gainer: The Government's 'generosity' must be viewed in proper perspective. As one sugar factory chairman explains: "It is good for the Government. It levys a purchase tax of Rs 16.40 per tonne. So for an annual production of two lakh tonne the Government receives about Rs 33 lakh. In three years it recovers its investment of rupees one crore. After that the money pouring in every year is a bonus. The Government is a great financial beneficiary of the sugar cooperative movement."
Tatyasaheb Kore, 64, is the chairman of the Warana Cooperative Sugar Factory, situated some 20 km north of Kolhapur in the Warana Valley. Started in 1959 with an initial share capital of Rs 20 lakh, the Warana factory today has a turnover of over Rs 10 crore and produces 50,000 tonne of sugar every year.
According to Kore, "In those days (before 1959), the condition of the Warana Valley, comprising some 66 villages, was one of (great) hardships. Extreme poverty was the order of the day. Robbery was a common thing. The atmosphere was charged with fear."
Kore is a deceptively mild-looking man. White-haired, bespectacled and soft-spoken, but with an unsettling propensity to burst into fits of good-natured laughter for no apparent reason. He spends most of his time in his beloved Waranagar. He has built schools, hospitals, guest houses along with a personality cult.
His Thoughts of Tatyasaheb published in the magazine Big India, are an incongruous (and often self-contradictory) mixture of rural sagacity and urban triteness. One thoughtful vignette: "An officer becomes an officer because he could afford a particular education. If a peon were educated, he could be an officer and if the officer were not educated then, he, too, would be a mere peon today!"
Indirect Power: Though politically "inactive" himself, Kore obviously wields considerable influence in the corridors of power. Says an insider: "A man who has built schools, colleges, and hospitals in his district must have a bit of political clout. Just imagine! His cooperative factory has thousands of members. They are indebted to him and in an election would certainly vote for the candidate he supports.
"Former chief ministers Y.B. Chavan and V.P. Naik were his good friends. He may deny it now. But it is a fact that Kore personally handed over to Naik in 1972 a sizeable donation for the chief minister's defence fund. And it is also a fact that it was Y.B. Chavan who inaugurated the Warana Sugar Factory, when he was the chief minister of Maharashtra."
Surprisingly, Kore himself concedes: "Half the ministers in the Maharashtra cabinet are connected with sugar factories." He adds, smiling broadly: "Ten factories are held by the Janata, 15 by Pawar's group, five by the Indira Congress faction, one by the Peasants' and Workers' Party (PWP) and the rest by Vasantdada."
Sugar Politicians: Indeed, the inscrutable former chief minister owes his political solvency to the sugar prop. He started the Shetkari Sugar Cooperative Factory, one of the biggest in the state, in 1959. Though he is no longer chairman of the factory, he is still probably the most powerful "sugar-politician" in the State.
Others, however, are not far behind. Former state finance minister Y.J. Mohite began the Krishna Sugar Factory in 1959, while former civic supplies minister Ratnappa Kumbhar was founder chairman of the Panchaganga Factory. The three companies are collectively worth Rs 60 crore, according to reliable sources in the sugar industry.
The ostentatious life-style of rural sugar barons would be hard to match, even for big industrialists. One cooperative sugar factory chairman held a feast for one lakh guests to celebrate his daughter's wedding. It is said that the same man received several lakh rupees worth of presents from rich landlords on another similarly auspicious occasion.
Forty-nine-year-old Shankarrao Kolhe is perhaps the archetypal sugar baron. He has been chairman of the Sanjivani Sugar Cooperative for 13 years, is married, with three daughters and one son, and lives in a village in Ahmednagar district.
Like Kore, Kolhe is essentially a smalltime sugar farmer who has climbed up the economic ladder through sheer grit. Unlike Kore, however, Kolhe has also ascended the political ladder. He is an MLA from Kopargaon, now serving his second term. Kolhe began his political career as an independent but later joined the Vasantdada Congress.
Kolhe's Sanjivani Cooperative Factory was set up in 1963 in Ahmednagar district. It has a 2,000 tonne per day crushing capacity and produced rupees seven and a half crore worth of sugar last year.
Says Kolhe: "Before 1963 I was doing my own sugarcane farming. A crisis occurred between 1957 and 1960 when jaggery prices crashed. The private sector sugar companies were then either giving the farmer an unprofitable price for his crop or not buying it at all."
Kolhe has been chairman of his sugar factory for 13 of the last 15 years but vehemently denies that there is any link between his political and business life. "My sugar industry connections did not in any way help me become an MLA."
His other connections? He is chairman of the Public Undertaking Committee of the Maharashtra Assembly as well as chairman of the National Heavy Engineering Cooperatives.
Kolhe ridicules Chief Minister Sharad Pawar's recent charges that the sugar lobby is doing its utmost to help Vasantdada topple his government. "If sugar money is being used to influence politics why doesn't the Government take immediate action? After all a Government representative is appointed on the board of every sugar cooperative to scrutinize its finances. Why are they keeping quiet?"
He adds: "Pawar is himself a member of two sugar cooperatives - the Malegaon and Chatrapati factories, to be precise." And according to another sugar baron-cum-politician, "Sharad Pawar's brother was managing director of two sugar factories. And one more brother is a director in another sugar factory."
Sugar, it would seem, has sweetened the lives of many politicians in the state. But, it has left a bitter taste in the mouths of their less fortunate opponents.