SUGAR INDUSTRY IN INDIA

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• The Cabinet Committee on Economic Affairs has hiked Fair and Remunerative Price (FRP) of sugarcane for sugar season 2022-23 (October – September) by Rs 15 per quintal.
• The Centre has also announced a premium of Rs 3.05 per quintal for each 0.1% increase in recovery of sugar over and above 10.25% and reduction in FRP by Rs 3.05 per quintal for every 0.1% decrease in recovery.
• Recovery rate is the amount of sugar that sugarcane fetches and higher the quantum of sugar derived from sugarcane, greater the price it fetches in the market. 

Sugarcane Cultivated

Temperature: Between 21-27°C with hot and humid climate.

Rainfall: Around 75-100 cm.

Soil Type: Deep rich loamy soil.

Top Sugarcane Producing States: Maharashtra>Uttar Pradesh > Karnataka

• It can be grown on all varieties of soils ranging from sandy loam to clay loam given these soils should be well drained.
• It needs manual labour from sowing to harvesting.
  It is the main source of sugar, gur (jaggery), khandsari and molasses.
• Scheme for Extending Financial Assistance to Sugar Undertakings (SEFASU) and National Policy on Biofuels are two of the government initiatives to support sugarcane production and the sugar industry.
• The Prices of Sugarcane are Determined by the Central Government (Federal Government) and the State Governments.

Government Encouraging Sugar Production

• The government wants to reduce its Import Bill on Crude Oil by cutting oil imports and blending ethanol with Petrol under the Ethanol Blended with Petrol programme.
• Currently, India’s 85% requirement of crude oil is met through imports.
• Also, to reduce pollution & to make India AtmaNirbhar in petroleum sector, Government is encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol, which not only serves as a green fuel but also saves foreign exchange on account of crude oil import.
• In the current sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted & by 2025-26 more than 60 LMT of sugar is targeted to be diverted to ethanol, which would address the problem of excess sugarcane as well as delayed payment issue because farmers would get timely payment.
• The government has fixed a target of 10% blending of fuel grade ethanol with petrol by 2022 & 20% blending by 2025.

Challenges Associated with the Sugar Industry

• Pricing Controls: In order to plug the demand-supply mismatch, the union & state governments have been controlling sugar prices through various policy interventions like export duty, imposition of stock limit on sugar mills, change in meteorology rule etc.
• However, the government control of pricing is populist in nature and this often leads to price distortion.
• This has triggered that sugar cycle oscillating between massive surplus and severe shortage.
• High Input and Low Output Cost: The falling/stagnant price of sugar in recent years in the backdrop of continuous rise in sugarcane prices is the main source of troubles faced by the sugar industry in the last few years.
• Due to this, the government grappled with large cane arrears while the industry survived on periodic government funded bail-outs and subsidies.
• It is because of the unviability of the business, no new private investments 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 international sugar price.
• The government sought to bridge the price gap by providing export subsidies, but this was promptly contested by other countries in the WTO.
• Further, India under WTO’s agreement on agriculture has been allowed to continue with the subsidies till December 2023. The fear is what will happen post-2023.
• Dismal Performance of India’s Ethanol Programme: Blending ethanol with petrol for use as auto 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.

Way Forward

• There is a need to deploy remote sensing technologies to map sugarcane areas.
• Despite the importance of sugarcane in the water, food and energy sectors in India, there are no reliable sugarcane maps for recent years and in time series.
• Research and development in sugarcane can help address the issues like low yield and low sugar recovery rates.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT