Sugarcane cultivation in the country has expanded in the last few decades. Factors such as policies that incentivize production, including a minimum price, guaranteed sales of sugarcane, and public distribution and marketing of sugar, have helped India become the second-largest producer of sugar worldwide.
However, factors like rainfall deficit, depleting groundwater table, soil infertility, delayed payment to cane farmers, lower net income (for the farmer) compared to other crops, labour shortage, and increasing cost of labour, followed by Covid-19 pandemic are paralyzing the entire sugar sector of the nation.
As sugarcane is considered as a cash crop, rectifying issues that grapple the sugarcane industry remains critical and important for Indian agriculture and doubling farmer’s income.
Associated Challenges With Sugarcane Industry-
In order to curb the demand-supply mismatch, the union & state governments have been controlling sugar prices through various policy interventions like export duty, imposition of a stock limit on sugar mills, change in meteorology rule, logistics initiative, etc.
However, the government control of pricing is populist in nature and this often results in price distortion.
This has triggered the sugar cycle oscillating between huge surplus and severe shortage.
High Input and Low Output Cost:
The falling/stagnant price of sugar in recent years in the backdrop of continuous increase in sugarcane prices is the main source of troubles faced by the sugar industry in recent years.
Due to this, the government grappled with large cane arrears while the industry survived on periodic government-funded and support bail-outs and subsidies.
It is because of the unavailability of the business, no new private investments and entrepreneurs are being done in the sugar industry.
Unviability Sugar Exports:
Indian exports are unviability as the cost of producing sugar (thanks to high cane price) is way above the benchmark international sugar price.
The government sought to bridge the price gap by providing export subsidies, but this was promptly contested by other countries of the world in the WTO.
Further, India under WTO’s agreement or treaty on agriculture has been allowed to continue with the subsidies till December 2023. The fear is what will happen in this sector post-2023.
Dismal Performance of India’s Ethanol Programme-
Blending Ethanol with petrol for use as logistics fuel, was first announced in 2003, but the problem never took off.
The poor pricing of ethanol supplied for blending, periodic shortages of sugar and competing demand from the potable alcohol sector of the nation.
Despite the importance of sugarcane in the water, food, and energy sectors in the country, there are no reliable sugarcane maps for recent years and in time series.
Thus, there is a need and importance to deploy remote sensing technologies to map sugarcane areas.
Research and development in sugarcane can help address the issues like low yield and low sugar recovery pricing.
For example, in 2016-17, a new variety of sugarcane (CO 238) was developed for use in the state of Uttar Pradesh (UP).
Considering that UP produces the bulk of India’s sugarcane, its share in the country’s sugar output rose to 40 percent from 25 percent in recent years.
This singular development effectively broke the sugar cycle and made India a consistently surplus sugar producer of the world.
Freeing-up Cane Pricing:
The central government has taken various measures to help the sugarcane sector, but reforms in the sugarcane sector will start to manifest when price discovery will occur with economic sense.
In this context, the Rangarajan committeehas suggested a Revenue Sharing Formula formula to fix cane price factoring in the price of sugar and other by-products.
Further, in case the cane price, arrived at by the formula, drops below what the government considers as a reasonable payment, it can bridge the whole gap from a dedicated fund created for the purpose and a cess can be levied to build up the fund.
Supporting Biofuel Production:
Government should encourage and incentivize ethanol production. It will bring down the country’s oil import bill and aid in the diversion of sucrose to ethanol and balance out the excess production of sugar in the country.
For this, the government should allow ethanol making directly from sugarcane juice, which is presently restricted to only molasses.
The sugar industry is a mode of livelihood for 50 million farmers and their family members. It provides direct employment to over 5 lakh skilled laborers but also to semi-skilled laborers in sugar mills and allied industries across the country.
Considering the importance of the sugar industry, the crisis faced by sugarcane farmers needs to be resolved fastly through center and state policy initiatives.