Genesis of Sugarcane and Sugar
It is universally acknowledged that India is the homeland of sugarcane and sugar. There are references of sugarcane cultivation, its crushing and preparation of Gur in Atharva Veda as well as Kautaliya's Arthasastra. The scribes of Alexander the Great, who came to India in 327 BC recorded that inhabitants chewed a marvelous reed which produced a kind of honey without the help of bees. The Indian religious offerings contain five 'Amrits' (elixirs) like milk, curd, ghee (clarified butter), honey and sugar - which indicates how important sugar is not only as an item of consumption but as an item which influences the Indian way of life. It is understood that sugar was initially made in India during fourth and sixth centuries by cutting sugarcane into pieces, crushing the pieces by weight to extract the juice and then boiling it to crystalise. These crystals were called 'Sarkara' meaning gravel in Sanskrit. The word sugar is a derivative of 'Sarkara'. The larger lumps were called Khand from which the English word 'Candy' is derived. Around 600 AD the Chinese Emperor, Tsai Hang sent an emissary to Bihar - where sugarcane was cultivated for making sugar - to learn the art of making sugar. Therefore it is from India that the art of making sugar went to Persia and subsequently to the world over.
Although sugarcane was being grown in India from time immemorial and sugar produced in lumps during fourth century, there was no sugar industry in India. It is said that the first sugar plant in India was established by the French people at Aska in Orissa in 1824. Not much is known about this factory except that it was maintained by Late James Fredrick Vivian Minchin and that it stopped its operation around 1940. However, the first vacuum pan process sugar plant was set up at Saran in Marhowrah in Bihar in 1904. By 1931-32 there were 31 sugar factories in India all of which were in the private sector. The total production of sugar at that time was only about 1.5 lakh tonnes, whereas the consumption was about 12 lakh tonnes. To meet the domestic demand of sugar, India had to import sugar mainly from Java (Indonesia).
A Macro Economic Overview
In 1930, the Tariff Board appointed by the Government of India decided to recommend grant of protection to Indian sugar industry by way of imposing custom duty of 7.25 per cent plus surcharge of 25 per cent on the sugar imported to India. Accordingly, the Government of India promulgated in 1932 the Indian Sugar Industry Protection Act for a period of 15 years, thereby enabling the Indian Sugar Industry to develop, stabilise and compete with imported sugar. As a result of this protection granted to the Indian sugar industry, there was a spurt in the establishment of sugar factories and by 1933-34, there were 111 sugar factories producing 4.6 lakh tonnes of sugar. But the development was mainly in the private sector and in the sub-tropical belt, comprising the States of Uttar Pradesh, Bihar, Punjab and Haryana. By 1940-41 the number of sugar factories had increased to 148 and production was around 11 lakh tonnes. Even this 11 lakh tonnes of sugar production could not be depended upon, as there was fluctuation in the supply of sugarcane. After 1940-41 there was no expansion in the Indian sugar industry for some time and India continued to depend heavily upon imported sugar. Further, as all the factories were established by private capitalists, the sugarcane farmers were exploited and the Government had to take various measures and pass laws relating to sugarcane price and its payment to protect sugarcane growers.
Passing of the Cooperative Societies Act, 1904
The Cooperative Societies Act was enacted in India in 1904 with a limited objective to provide cheap credit to the farmers and save them from exploitation of money lenders. It was only in the early 1930’s that the cooperative movement penetrated into the sugar sector. The increasingly high rates of interest charged by money lenders and violent fluctuations in the Gur, Jaggery and Sugar markets, led the farmers to utilise the under lying notion of self help and self reliance, in the Cooperative Societies Act and led to the setting up of cooperative societies and cooperative sugar factories. However the real growth of the cooperative sugar sector started after India’s independence, when the Government decided to industrialise the country by expanding the cooperative sector. The principal of cooperation was assigned an important role for the country’s economic and social development and was given priority over the other sectors. Due to the involvement of farmers right from the inception, the sugar factories were never looked upon as merely processing units of sugarcane, but through the medium of the factories they endeavored for socio-economic, educational and cultural development of the entire area surrounding the sugar factories.
Emergence of Cooperative Sector
Although, the Cooperative Societies Act was already enacted in 1904, the same year that the first vacuum pan sugar factory at Saran in Mahowrah, Bihar was established, it was only in 1933-35 that the cooperative movement made an in-road into the sugar sector in Andhra Pradesh. Although sugarcane was not one of the principal crops of Andhra Pradesh, the sugarcane growers badly affected by the violent fluctuations of the jaggery market, decided to utilise the underlying notion of self-help and self-reliance in the Cooperative Societies Act and organised cooperative societies and set-up cooperative sugar factories at Etikoppaka, Thummapala and Vuyyuru. However, because of initial teething problems, lack of organisational and managerial ability and scarcity of funds, Thummapala and Vuyyuru had to be sold off to private enterprises. Thummapala, was however, returned to the cooperative fold in 1959 in the name of Anakapalle Cooperative Agricultural & Industrial Society Ltd. Etikoppaka Cooperative Sugar Factory in Andhra Pradesh survived because of good leadership, strong backing of the Central Cooperative Bank, gradual and cautious expansion, good relationship with members, payment of higher cane price and variety of other effective incentives. During 1933-35, in Uttar Pradesh also a cooperative sugar factory was set up at Biswan which also had to be sold off to private enterprise.
Growth of Cooperative Sector of Sugar Industry
The growth of the Indian sugar industry in an organised manner had its beginning, when the Government of India passed the Industrial Policy Resolution on April 6, 1948, followed by the Industrial Act, 1956, wherein the principle of Cooperation was assigned an important role for the country's economic development, particularly for industries based on agricultural produce such as sugarcane. Under this policy, the Government of India started giving preference to licensing of new sugar factories in the cooperative sector. This policy was reemphasized in all the subsequent Industrial Policy Resolutions made by the Government till the delicensing of sugar industry in 1998. The preferential licensing policy was mainly responsible for the rapid development of the sugar industry in India.
As a result of the preferential policy adopted by the Government in the matter of licensing, there was a spurt in the establishment of sugar factories, especially in the cooperative sector of Maharashtra. The evolution of cooperative sugar industry in Maharashtra has been a trend setter for all the cooperatives in India. The establishment of sugar factories in areas which did not have any irrigation facilities and which were almost barren i.e. Pravara, Sanjivani and Sangamner represented a category of considerable significance, not only because of the success they achieved as agro industrial units concerned with production of an important commodity like sugar, but also in terms of the distribution of socio-economic benefits to all their members spread over the entire sugarcane belt in the country.
Another crucial development was the adoption of social land reforms policy by the Government of independent India. Ceiling was imposed on land holdings - both irrigated and dry land. This made private sugar factories with captive large sugarcane plantations unworkable. Even the sugarcane estates developed by private sugar factories in Maharashtra State were taken over by the State Government and brought under the control and management of State Farming Corporation, a State Government undertaking. The private entrepreneurs lost interest in sugar industry.
The first cooperative sugar factory to be set up in Maharashtra was the Pravara Cooperative Sugar Factory at Ahmednagar. Ahmednagar district already had six joint stock companies - three of them in Kopergaon Taluka. There was rampant exploitation of sugarcane farmers by owners of the joint stock companies. The joint stock companies were given on long lease the land of large number of small cultivators at a very nominal rent of Re.1/- per annum/acre. On this, the joint stock companies established their own large sugarcane estate and made huge profits. The joint stock companies paid very low price for the sugarcane and as it was not binding on them to purchase all the sugarcane grown, the cane growers had to very often burn their sugarcane fields thus making them bankrupt. As there was no irrigation worth the name and as rainfall was scanty, the Pravara area was barren. Although the Pravara canal had come into existence in 1910, the farmers had not taken to canal irrigation. Because of the exploitation of the joint stock companies and deriving impetus from the Malis of Saswad village, who had made use of the Neera Canal and prospered, the farmers of the Loni area under the leadership of Padmashree Dr. Vikhe Patil and guidance of Prof. D.R. Gadgil, Dr. Vaikunthabhai Mehta and help of Maharashtra State Cooperative Bank which helped in the collection of share capital, registered the Pravara Cooperative Society and set up the Pravara Cooperative Sugar Factory.
The Pravara cooperative sugar factory has introduced many features - social, educational and cultural - as part of its total contribution for the well being, both of its farmer members and of the environment of which they are a part of. It has throughout been a member controlled, non-official organisation. Loyalty of the members, based on the reciprocal assistance given continually by the factory and also on economic consideration, has been the special characteristic of this cooperative. From the social angle, the society has always paid special attention to small farmers. It takes step for the welfare of its factory labour as well and provides them with all the necessary amenities. Every village in its operational area has been linked with well constructed road. A network of Schools, Colleges, Professional Colleges, Medical Colleges, all contributing to the economic resurgence of the region. The Pravara Cooperative Sugar Factory has been a trend setter. Pt. Jawaharlal Nehru, when he visited Pravara Cooperative Sugar Factory in 1961 had said "I have heard about this cooperative sugar factory and had some idea of it, but a visit here and learning more about it has been a revelation. Ten years of growth since this was first started, has not only shown marked development but has begun to change the countryside. I would like people from other States to come here and see how a real cooperative is organised and run. This is an example for the nation. I wish it all success".
The sugar industry’s contribution, to the Indian economy is presently enormous with its total turnover of over Rupees Fifty five thousand crores (Rupees Five hundred fifty billion) or 12 billion US Dollars per year. The Indian sugar industry is amongst the largest tax payers to the Central exchequer contributing Rupees Two thousand six hundred crores per annum (Rupees Twenty six billion) or 0.568 billion US Dollars per year. Additionally, the industry also contributes substantially to the State exchequer. Over fifty million sugarcane farmers and their dependents and a large mass of agricultural labourers are involved in sugarcane cultivation, harvesting and ancillary activity. It is worth mentioning that the industry employs over five lakh skilled and unskilled workers mainly from the rural areas. Thus, over 7.5 per cent of the rural population of India is directly or indirectly dependent on the sugar industry. Today India is the second largest producer of sugar in the world after Brazil and the cooperative sector is responsible for about 48 per cent of the total production. The role of the cooperative sector of sugar factories in the socio-economic development of India can hardly be over-emphasized. The role of the cooperative sector is of paramount importance in the present scenario of liberalized economy because it is only the cooperative effort which can make Indian sugar globally competitive. However, for this the Cooperative Sector of the sugar industry should be permitted to function in a democratic manner. There are still some States where the Cooperative Sector sugar factories are managed by the Government appointed Administrators.
Establishment of National Federation of Cooperative Sugar Factories Ltd. (NFCSF)
The Pravara factory was a torch bearer for others to follow. Not only was it replicated in Maharashtra, but in other States like Gujarat, Haryana, Karnataka, Tamil Nadu, Uttar Pradesh and Punjab where, the sugar farmers found the cooperative form of organisation more attractive and advantageous. As more and more cooperative sugar factories were being set up, the need for an apex organisation at the State level to mediate with the State Governments and guide them in all respects was felt. This led to the formation of State level Federations of Cooperative Sugar Factories. Simultaneously, it was also realised in 1957 that as 'Sugar' was central subject, there was a need of a spokesman at the Centre to take up all matters of cooperative sugar factories with Central Government and to guide them technically and otherwise and thus the National Federation of Cooperative Sugar Factories Limited was established on December 2, 1960 for promoting and guiding the increasing number of cooperative sugar factories on a national level.