Nizam Sugar Factory revival: Why 3 Telangana farmers are taking on KCR in Gajwel

Since 2015, all three units of Telangana’s Nizam Sugar Factory, once the largest in Asia, have remained shut. But whenever sugarcane farmers raise questions about the revival of the factory, they are told not to ask anything. Incensed by these responses, three members of farmers’ organisation Rythu Aikya Vedi — Mamidi Narayana Reddy, Baddam Srinivas Reddy, and Navnandi Limba Reddy — have filed nominations from the Gajwel seat for the upcoming assembly elections. They have decided to challenge Bharat Rashtra Samithi president and Telangana Chief Minister K Chandrasekhar Rao to bring to attention the issues faced by sugarcane farmers. 

The Nizam Sugar Factory was established at Bodhan in Nizamabad in 1938 by Mir Osman Ali Khan, the last Nizam of Hyderabad. The factory has two additional units at Metpally in Jagtial and Mumbojipally in Medak.

In 2002, the Telugu Desam Party government of undivided Andhra Pradesh sold 51 percent shares in the factory to Deccan Papers Limited. It was then renamed Nizam Deccan Sugars Limited, also known as NSDL. One of the promises of the BRS (then Telangana RS) in the 2014 elections was that they would revive the factory. In 2015, the TRS government issued a government order to continue the factory, which was functioning in a public-private partnership model, into a cooperative society.

During an assembly session in 2016, CM KCR said, “We intend to revive the factory, it is the pride of Telangana. But we did not make any definitive promise. The government cannot run the factory as it is not financially viable.”

Subsequently, the private management approached the National Company Law Tribunal in 2017 for liquidation, leading to the closure of all three units.

As part of its efforts to convert the NDSL into a cooperative society, the KCR government had sent 400 farmers to Maharashtra to study how cooperative societies run sugar factories there. However, the government did not proceed with the move. “On returning from Maharashtra, the farmers did not show interest in the idea, thus making the government shelve the plan,” KCR said. 

In a recent interview with TV9, BRS working president and KCR’s son KT Rama Rao reiterated this, stating that it was unfortunate that the farmers did not unionise to form a cooperative society.

The farmers said that the cooperative setup proposed by the government is not suitable for Telangana, as the conditions in the state differ significantly from the large-scale cooperative societies in Maharashtra. 

At present, there are 190 co-operative sugar factories in Maharashtra. According to them, KCR is trying to shift the blame of closing the factory to their decision to not form a cooperative society. 

“We toured Pune, Baramati, and Satara districts in Maharashtra. The factories there are like rice mills in our state. Sugar barons from political parties are involved in the industries. How can only farmers run such a cooperative society here,” Limba Reddy said.

Telangana’s Nizamabad-Karimnagar-Medak-Adilabad belt is known for the production of sugarcane and turmeric. Statistics provided by Telangana’s Directorate of Sugarcane show that the state stands eighth in the country in sugarcane yield (tonnes per hectare).

Telangana stands 13th in the country in annual production, with more than two million tonnes per year. Uttar Pradesh is the largest producer of sugarcane in the country. 

In his Assembly speech in 2016, KCR had said, “Ten lakh metric tonnes of sugar cane are needed for the three units of the NSDL. Telangana farmers are not capable of producing so much, and production has also gone down.”

The farmers attribute this to subsequent governments having forced them to shift towards paddy by failing to support sugarcane, which has historically been their main crop.

“Now the government, which should ideally step in to guarantee fair prices and support crop loss insurance, is dictating the terms farmers, telling them to either run it as a cooperative society or not run it at all. With this, KCR has made it clear that he will only back programmes that will benefit the government,” said Rythu Aikya Vedika member Baddam Srinivas Reddy.

Since the closure of the Nizam Sugar Factory, Metpally farmers have been transporting their sugarcane to private industries in Kamareddy district. Despite the government subsidy, the transport cost remains around Rs 400 per tonne. Delays in transport can result in a loss of moisture in the sugarcane.  

"Earlier, we could demand an increase in Fair Remunerative Price (FRP) from NSDL. However, with private agents entering the field, the decision lies with the management. Even though sugar prices are increasing in the country, Telangana farmers receive only marginal increases in price every year,” Lambi Reddy said.

He added, “Now only my village is producing 700 acres under cultivation in Korutla. In other villages that have not entered into agreements [regarding sugarcane procurement] with crushers, paddy cultivation has increased. Continuous cultivation of paddy decreases the fertility of the soil.” 

Srinivas said he contested against K Kavitha, daughter of KCR, in the 2019 Lok Sabha elections. He contested along with turmeric farmers who filed nominations from Nizamabad as a sign of protest. As a result, Kavitha had lost the seat to Bharatiya Janata Party’s D Arvind.

“The government's reluctance to take over the sugar factory indicates a lack of intention to support sugarcane farmers and its inability to generate significant profit for the government. This raises questions about BRS's support for the Visakhapatnam steel plant employees'  protest from Andhra Pradesh against privatisation,” Srinivas said. 

The BRS declared its intention to enter the bid to stop the Visakhapatnam Steel Plant acquisition when the Union Government decided to invite bids for it in March of this year, but later chose not to. KCR government was criticised by the Opposition for failing to address the Nizam Sugar Factory issue in their state while attempting to garner attention in Andhra Pradesh.

This report has been published as part of the joint NL-TNM Election Fund and is supported by hundreds of readers. Click here to power our ground reports.