The first decade of the 20th century saw he decline of the Indigo industry in Mithila which gave way to the Sugar industry. Its ironical that sugar and Gur-Khandsari industry, which had been introduced in Mithila by the Dutch, was itself first a victim of the rise of the Indigo industry as a large number of sugar factories were converted to indigo factories during the changeover. The soil and climate were conducive to growing sugarcane all over Champaran, Muzaffarpur, Purnea, Darbhanga, Madhubani districts.
In 1900–1901, the “India Development Company” bought the Atahar and Agrial Indigo factories in Muzaffarpur to grow sugarcane. This revived and revitalised the sugar industry as the German chemical dye had taken the wind out of the Indigo industry. By 1910–11, there were 5 sugar factories in Darbhanga district. By 1948–49 there were 17 large sugar factories in the Mithila region employing around 18,000 people.
The market share of sugar industry can be judged from the fact that in the first five years of independent India (1949–53), the sugar industry contributed nearly Rs. 46 lakhs in taxes out of a total receipt of Rs. 6 crore for the state govt. At the time of independence, Bihar had 33 sugar mills (17 in Mithila region). Today, there are only 28 of which 17 are closed.
Even though Mithila region was one of the early beneficiaries of the sugar demand in Britain, fact remains that the region had poor road infrastructure and transport facilities. At the time of independence (early 1950s), the ratio of pucca roads (tar road) per 1 lac population was only 5 miles compared to 89 miles average for India as a whole. Even though the 2nd railway track was started to handle the Indigo commerce in the region, there was only 6 miles of railway track per 1 lac population compared to 10 miles for rest of India.
This lack of transportation led to low investment in industrialisation and slowed the process of urbanisation and modernisation. As a result, the “Indian Sugar Committee” setup in 1920 did not recommend any major initiatives to promote, upgrade and expand Mithila sugar industry. By 1932, only 5 sugar mills in Mithila region remained and Govt had to provide support for 7 years after a recommendation from Imperial Agricultural Research Council (Pusa).
Sugar industry flourished under this govt protection and within 4 years, there were 17 sugar mills in Mithila; the production rose eight times and by 1938–39, India had become a net sugar exporter. However, the imposition of restrictions on export quota introduced by 21 sugar producing nations had a huge negative impact as there was over-production and by 1942 sugar mills started closing down.
To manage over-production, the sugar mill owner started a union and adopted capacity / production controls to maintain product value (reduce production to control prices). By 1966–67, the sugar mills were completely operating like a clique and Govt had no control over them.
As the wave of nationalism swept over India, in 1972 the central government recommended state takeover of all sugar mills and nearly 15 sugar mills were taken over by the Bihar government from 1977–1985. These included:
1. Samastipur Central Sugar Cooperative Limited in Samastipur
2. Tirhut Cooperative Sugar Company Limited at Raiyam in Darbhanga district
3. Shital Sugar Works Limited at Goraul in Vaishali district
4. SKG Sugar Limited in Siwan district,
5. Guraru Sugar Mill at Phanphar in Gaya district
6. New Siwan Sugar & Gur Refining Company,
7. Darbhanga Sugar Company Limited at Lohat in Madhubani district
8. South Bihar Sugar Mill Limited at Bihta in Patna district
9. Sugauli Sugar Works Limited at Sugauli in East Champaran district
10. SKG Sugar Limited at Hathua in Gopalganj district
11. SKG Sugar Limited at Lauriya in West Champaran district
12. Motipur Sugar Factory at Motipur in Muzaffarpur district
13. Darbhanga Sugar Company Limited at Sakri in Madhubani district
14. Purnia Cooperative Sugar Factory Limited at Banmankhi in Purnia district
15. Warisaliganj Cooperative Sugar Mill Limited at Warisaliganj in Nawada district.
The rest is a story of politics, incompetence, corruption, apathy, neglect and everything wrong a govt that has no business to be in business can do to a business. Such has been the criminal negligence and mismanagement unleashed by the politicians and the elite IAS that the sugar industry is often referred to as a case study for “de-industrialisation of Bihar”.
From nearly 40% of sugar production of India, Bihar’s share has reduced to less than 4%. While Maharashtrian politicians have used sugar as a vehicle for power, money, prosperity of their regions, Bihar politicians are happy “selling” assets of nationalised sugar mills to cronies, for few lakhs of bribes and with zero interest in revival of sugar or any other industry.
The industry needed smart management that could stem the price slide, change product mix and manage input costs better. Instead, it got pompous, incompetent bureaucrats with near zero business and industry background and they promptly ran the industry to ground. Within 10 years, most factories had shut down and the govt owed hundreds of crores to employees and farmers.
By 2005, an “expert” committee had concluded that most of the mills could not be revived and should be shut down and redeveloped as any other viable industry. The Sakri sugar mill, setup in 1933 was the 1st to close down for ever under this recommendation.
Since 2008, the reverse of govt acquisitions has been planned / happening. All the mills which were taken over between 1977–85 are proposed to be “sold” back to private players many of whom are interested in the land, capability to produce ethanol and other industry. This started with HPCL bidding for two mills at Lauria and Sugauli.
Will the fortune of the sugar industry turn sweet in Mithila? The population has a fondness for sugar and sweet memories of 17 mills producing sugar in the region supporting farmers, labour, traders and the distribution network. The death of the sugar industry “hurts” every Maithil and stands out as a sore failure to industrialise.
Tejasvi Yadav has today promised to restart the Sugar and Jute mills. I don’t know if that is economically feasible, but it certainly has an emotional political appeal.