29 Oct Sugar Industry in India and Ethanol Projects (GS 3, Economics, The Hindu, Indian Express)
News/Context: Unseasonal rains in Uttar Pradesh and a higher diversion to ethanol production are likely to result in a drop in sugar production this year, according to industry estimates. With average retail sugar prices also on the rise, a reduction in surplus sugar could help speed up cane payments by mills and reduce their pending arrears to farmers this season.
Late payments and arrears have become a political flashpoint recently, especially in the poll-bound States of U.P. and Punjab. At the end of July, when the latest data is available, arrears to farmers stood at ₹2,417 crore.
Based on satellite images taken in the second week of October, the Indian Sugar Mills Association (ISMA)estimated that 54.37 lakh hectares has been sown with sugarcane this year, about 3% higher than during the previous season. However, the increased acreage is unlikely to translate into higher production. Due to heavy and untimely rainfall in U.P., especially in the eastern part of the State, yield and sugar recovery are both likely to fall this year. The first advance estimates pegged the production at 113.5 lakh tonnes.
Maharashtra is likely to overtake U.P. to become the highest sugar producing State this year, boosted by good monsoon rainfall and sufficient water availability in the reservoirs. Although ratoon cane availability is higher than plant cane, meaning that yield per hectare is expected to be slightly lower in comparison to last year, ISMA estimated production to be about 122.5 lakh tonnes.
As the 339 lakh tonnes of sugar to be produced is significantly higher than last year’s domestic sales of about 266 lakh tonnes, the sugar industry depends heavily on exports and diversion to ethanol production to reduce the surplus.
Sugarcane is one of the important commercial led industrial crops in India. It has contributed significantly to the growth of Indian Agriculture and National Gross Domestic Products (GDP). The rural economy in traditional sugarcane growing areas is primarily linked with sugarcane crop and sugar or allied industries. Since the early 20 century, a lot of emphasis has been laid on the research and development (R&D) associated with sugarcane crop, which enabled the sugar industry to progress through years.
Sugarcane is the prime source of sugar in India. It occupies a prominent position in the Indian Agricultural scenario on account of its wider adoption in different agro-climatic conditions of the country. It has a significant role in the national economy and provides raw material to sugar and over 25 other major industries viz. producing alcohol, papers, chemicals, and cattle feed. It also has a place in the pharmaceutical industry, next to textiles, which is entirely based on cane production as raw material. The industry has enabled the country to be self reliant in this highly sensitive essential commodity of mass consumption. Ethanol production and co-generation of electricity in sugar factories are yet other utilities that enhance the importance of sugarcane in the national economy. Besides the sugar factories and other industries based on its by-products, sugarcane also supports the rural and cottage industry of gur (jaggery) and khandsari which together produce about 7-10 million tonnes of sweeteners. Due to its multi-purpose uses in different industries, the demand is increasing for the increased production of sugarcane and its sustainability in the country.
Ethanol Projects: The Centre is encouraging sugar mills to divert excess sugarcane and sugar to ethanol. The government has allowed production of ethanol from B-Heavy molasses, sugarcane juice, sugar syrup, and sugar. To increase ethanol production capacity, the government is extending interest subvention of ₹4,687 crore to sugar mills/ distilleries against loans availed by them from banks to set up new distilleries or to expand their existing capacities. As the revenues generated from the sale of ethanol by sugar mills/ distilleries reach the accounts of sugar mills in around three weeks’ time as against 12-15 months taken from the sale of sugar, production of ethanol would improve the liquidity of sugar mills enabling them to make timely payment of cane dues to sugarcane farmers.
Way Forward: The world population is increasing day by day and would demand more food besides the natural resources like land and water. Keeping in view the need of 7 billion world population, agriculture will need more land and water to produce enough food grains. Availability of natural resources is depleting at a faster rate. Thus, to fulfill the needs of the future population would be a more challenging task for farming communities. Sugarcane is one of the multi-product main cash crops of India, and its use for sugar and renewable energy (production of ethanol), the task has become more challenging than ever before to cope-up the demand of adequate sugarcane production in spite of the shrinking available natural resources.
Moreover, choice of sugarcane varieties, planting methods and distance, time of planting, methods of irrigation and frequency of irrigations required, fertilizer management and integrated weed, insect-pest and disease management are critical practices to increase sugarcane productivity vis-a-vis reducing the cost of production and improving farmers income. Number of sugarcane production technologies have been developed at various sugarcane research stations, ICAR Institutes and State Agriculture Universities (SAUs). Exploitation of the potential of advanced sugarcane production technologies and proper dissemination of technologies at national level is required. Agriculture is the state subject and it has been observed that various technologies developed by state universities can bring improvement in other states also due to similar agro-climatic zone conditions.
Md Layeeque Azam, Economics Faculty
Plutus IAS Current Affairs Team Member