For sustaining the sugar sector, the
Centre should push ethanol production
- In order to help sugar mills deal with the 145 lakh tonnes of sugar
inventory 95 lakh tonnes more than the normal requirement of 50 lakh tonnes
the Centre has announced export subsidies as well as compensation for the
carrying cost of sugar mills.
- The move is aimed at placating the sugar cooperative sector in
Maharashtra which will go to polls soon.
There is a real issue of excess
- This is despite the fact that the cane crop for the 2019-20 season is
expected to be 47 lakh tonnes less than last year’s production of 329 lakh
- With domestic consumption estimated at 260 lakh tonnes, the surplus is
here to stay, threatening to depress prices.
- In order to hold up cane prices and clear farmers’ dues, buffer stocks
have become an inexorable necessity.
- Meanwhile, a global glut in sugar makes it difficult to export viably.
Hence, the Centre has, in the time-honoured tradition of placating this
politically powerful sugar sector, resorted to a short-term fix.
- There can be no getting away from increases in the support price, or
‘fair and remunerative price’.
Too high FRP
- Despite various efforts to reform the sector, the sugar mills are able
to extract concessions from the State on some pretext or the other
typically, it is of the FRP being too high for them to meet their costs and
- Cane arrears are now close to ₹16,000 crore, principally due to farmers
in Uttar Pradesh. But in Maharashtra, where the arrears are far lower,
there’s a larger social cost of keeping the cooperative sector going it
intensifies the impact of drought, particularly in arid regions such as
- There is certainly a case for this region moving away from growing cane.
- This calls for a well-thought-out plan, given the number of sugarcane
farmers and industry workers involved.
- For Maharashtra as a whole, sugarcane is a source of livelihood to 2.5
crore people in rural regions.
- About 1.6 lakh workers are directly employed by the industry, while
eight lakh workers are engaged in harvesting and transport operations every
- One option, as has been promoted by the Centre, is to actively encourage
the conversion of cane to ethanol by offering a high price for the latter.
- At present, ethanol is prepared from C-grade molasses, whereas efforts
should be made to prepare the same from sugarcane juice and B-grade molasses
- This will take care of excess stocks, with positive balance of payments
effects. Subsidies for sugar should be directed towards building ethanol
- However, sugar cooperatives are often run on less than commercial lines.
- Researchers have established how cooperatives are often milked to fund
election campaigns of cooperative chiefs.
- The system needs a clean-up.
This will take care of excess stocks, with positive balance of payments