Tatsat Chronicle Magazine

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India emerges world’s largest producers of sugar after record sugarcane production

Sugar cane
Slow change: Farmers are gradually adopting drip irrigation for cultivation of sugarcane in Sangli, Maharashtra

India has emerged as the world’s largest producer and consumer of sugar as well as the world’s second largest exporter of sugar with more than 5,000 lakh metric ton (LMT) sugarcane being produced in the country, according to figures released by Ministry of Consumer Affairs, Food & Public Distribution for the October to September period. About 3,574 LMT of sugarcane was crushed by sugar mills to produce about 394 LMT of sugar (Sucrose). Out of this, 35 LMT sugar was diverted to ethanol production and 359 LMT sugar was produced by sugar mills.

The season has proven to be a watershed season for Indian Sugar Sector. All records of sugarcane production, sugar production, sugar exports, cane procured, cane dues paid, and ethanol production were made during the season, officials said. Another highlight of the season was the highest exports of about 109.8 LMT that too with no financial assistance which was being extended up to 2020-21. Supportive international prices and Indian government policy led to this.

These exports earned foreign currency of about ₹40,000 crore. The government claims that this is the result of rebuilding the sector that helped in taking it out of financial distress in 2018-19 to the stage of self-sufficiency in 2021-22. During 2021-22, sugar mills procured sugarcane worth more than ₹1.18 lakh crore and released payment of more than ₹1.12 lakh crore with no financial assistance (subsidy) from Government of India

Thus, cane dues at the end of sugar season are less than ₹6,000 crore indicating that 95% of cane dues have already been cleared. It is also noteworthy that for SS 2020-21, more than 99.9% cane dues are cleared. The government has been encouraging sugar mills to divert sugar to ethanol and also to export surplus sugar so that sugar mills may make payment of cane dues to farmers in time and also mills may have better financial conditions to continue their operations.

Growth of ethanol as biofuel sector in the past five years has supported the sugar sector as use of sugar to ethanol has led to better financial positions of sugar mills due to faster payments, reduced working capital requirements and less blockage of funds due to less surplus sugar with mills.

During 2021-22, revenue of about ₹ 18,000 crore has been made by sugar mills and distilleries from sale of ethanol, which has also played its role in early clearance of cane dues of farmers. Ethanol production capacity of molasses and sugar-based distilleries has increased to 605 crore litres per annum and the progress is still continuing to meet targets of 20% blending by 2025 under Ethanol Blending with Petrol (EBP) Programme.

In new season, the diversion of sugar to ethanol is expected to increase from 35 LMT to 50 LMT, which would generate revenue for sugar mills amounting to about ₹25,000 crores. There is an optimum closing balance of 60 LMT of sugar, which is essential to meet domestic requirements for 2.5 months.

The diversion of sugar to ethanol and exports led to unlocking of value chain of the whole industry as well as improved financial conditions of sugar mills leading to more optional mills in ensuing season.

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