Too sweet to swallow: Tracking Indian sugar industry’s highs and lows
India, the world’s second-largest sugar producer, faces fluctuating yields and ethanol-driven production shifts. While ethanol demand boosts modernization and farmer income, it impacts exports. Key sugar-producing states report lower yields, prompting calls for government intervention. Experts suggest revising the Fair and Remunerative Price (FRP) and maintaining buffer stocks to stabilize prices and sustain the industry.
India’s sugar production doesn’t get the kind of attention that other staples like wheat, onion or even lentils (dal) get. But the fact remains that the nation is one of the world’s biggest producers of sugar—second only to Brazil—despite the highs and lows it is facing.
India’s sugar production has some extreme contradictions, depending on who you listen to and what you hear about it. For example, while the National Federation of Cooperative Sugar Factories Association has posted lower production this year due to premature flowering of sugar crop as well as infestations, the private sugar millers association, ISMA (Indian Sugar & Bio-energy Manufacturers Association), has estimated much higher output.
Similarly, there is the whole ethanol issue. Many manufacturers believe the Indian government’s ethanol mandate, which proposes a mix of upto 20 per cent of ethanol in petrol by the end of this year, has made many mills divert their production towards ethanol.
This may not be a bad thing if you believe Alok Saxena, executive director of Gobind, a Zuari Industries-run sugar mill. “The increased demand for ethanol has forced sugar mills to adopt modern technologies and improve their efficiency. Farmers too are benefiting, as consistent demand for sugarcane ensures better income and timely payments. As more sugar mills start producing ethanol, the industry is seeing a positive change, and India is becoming a global leader in biofuel production, and sugar cane farmers and millers have a brighter future,” Saxena said.
But the ethanol drive is not without its own challenges. For example, the push towards ethanol may not have seen a rise in price of the raw material in the domestic market, but it has already had an impact on exports. Last year, Wilmar noted that 50 lakh metric tonnes of sucrose was redirected to ethanol production. In fact, estimates are that with climate issues hitting both Brazil and India, other countries might just gain an advantage on the sugar export scene.
In India, the industry still looks to the government for solace. Already, Maharashtra, Uttar Pradesh and Karnataka, three of the biggest sugar cane cultivating states have reported a dip in production.
“The industry oscillates between surplus and deficit, leading to excess stock or shortages and disruption in the market. Export restrictions to maintain domestic availability prevent India from fully leveraging global demand. All this puts the industry’s sustainability at risk, necessitating government intervention,” explains Saxena.
His solution? “Revising the Fair and Remunerative Price (FRP) regularly (to) ensure sugarcane farmers get fair returns and mills make profits. Create buffer stocks in surplus years to stabilise prices and ensure supply during lean periods.”
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Source : The Week
