Sugar can be manufactured from sugarcane, sugarbeet, or any other sugar-producing crop. Sugarcane, on the other hand, is the primary source of sugar in India. This is the second-largest agricultural industry in the world, behind the cotton textile sector. India's sugarcane sector is the world's largest, and it is the world's second-largest producer of sugar after Cuba. There is a total capital investment of Rs. 1,250 crore in this business, which employs 2.86 lakh people. Furthermore, this business benefits 2.50 million sugarcane growers. This article will explain to you the Sugar industry: Problems and challenges of the current pattern which will be helpful in Geography preparation for the UPSC Civil service exam.

Sugar Industry

• Sugarcane is a heavy, low-value, weight-losing, and perishable raw material used in India's sugar industry.
• India stands second as a world producer of sugar but occupies the first place in the production of gur and khandsari.
• Sugarcane cannot be preserved indefinitely due to the loss of sucrose content. Furthermore, it cannot be transported over great distances since any rise in transportation costs would increase production costs, and the sugarcane might dry out along the way.
• India produced 33 million metric tonnes of sugar in 2017/2018, making it a prominent player in the global sugar trade. Sugar output is at an all-time high in the country, and it is on track to surpass Brazil as the world's largest sugar producer.
• Sugar output in India increased by 11.5 percent from 2014 to 2015 due to strong cane harvests.
• This surge in output resulted in a large glut of sugar in India, with mills failing to pay workers a decent salary.
• In the north, Uttar Pradesh, Bihar, Haryana, and Punjab, and in the south, Maharashtra, Karnataka, Tamil Nadu, and Andhra Pradesh, the sugar business is widely dispersed.
• In comparison to north India, South India has a tropical environment that is conducive to increased sucrose concentration, resulting in higher yield per unit area.

Sugar Industries in India

Sugar industry - Significance

• Sugar is a labour-intensive sector across the board, from cane farming through sugar and alcohol manufacture.
• It is the primary source of employment in several districts throughout Uttar Pradesh, Maharashtra, Tamil Nadu, Karnataka, and other states.
• For 50 million farmers and their families, the sugar business provides a source of income.
• It employs about 5 lakh skilled workers, as well as semi-skilled workers, in sugar mills and related sectors across the country.
• The sugar industry's many byproducts also contribute to economic growth and support a variety of affiliated businesses.
• Sugarcane has evolved into a multi-product crop that is utilised as a primary raw material for the manufacture of sugar, ethanol, paper, power, and auxiliary products, among other things.
• Molasses from sugar cane are used to make alcohol and feed cattle since it is very nutritious.
• Sugarcane molasses, a by-product of sugar production, is used to make the vast majority of ethanol in India. Blended ethanol fuel can help reduce crude oil imports.
• The most common application of bagasse is as a fuel. However, it is also a good raw resource for the paper industry.
• Agricultural leftovers provide 30% of the cellulose required. However, because the mills are dispersed across the country, collecting leftover baggage is difficult and renders paper units unprofitable.

Sugar industry - Problems and challenges

• Sugarcane competes with a variety of other food and cash crops, including cotton, oil seeds, rice, and others.
• This has an impact on the availability of sugarcane to mills, and sugar output varies from year to year, producing price volatility and losses in times of surplus production owing to low pricing.
• In comparison to other of the world's leading sugarcane producing countries, India's output per hectare is exceedingly low. For example, India's production is just 64.5 tonnes per hectare, but Java's yield is 90 tonnes and Hawaii's yield is 121 tonnes.
• Sugar production is a seasonal industry with a relatively brief crushing season that lasts between 4 and 7 months every year.
• It results in financial losses for workers, as well as a lack of full utilisation of sugar mills.
• In India, the average rate of sugarcane sugar recovery is less than ten percent, which is quite low when compared to other major sugar producing countries.
• The high cost of manufacturing is due to the high cost of sugarcane, inefficient technology, uneconomic production processes, and expensive excise tax.
• Most sugar mills in India are tiny, with capacities ranging from 1,000 to 1,500 tonnes per day, they are unable to benefit from economies of scale.
• To balance the supply-demand gap, the government has used a variety of policy interventions like export duties, stock limits on sugar mills, and changes in meteorological rules, among others.
• However, these restrictions have resulted in low sugar prices, causing sugar mills to fall behind on payments and sugarcane growers to owe dues.

Sugar Industry - Government Initiatives

• The sugar sector experienced a watershed year in 2013-14.
• The Central Government accepted the suggestions of the sugar deregulation committee led by Dr. C. Rangarajan and decided to terminate the system of mill levy requirements for sugar produced after September 2012, as well as the regulated release mechanism on open market sugar sales.
• The sugar industry was deregulated in order to improve the financial health of sugar mills, increase cash flow, minimise inventory costs, and ensure that sugarcane growers were paid on schedule.
• The Committee's recommendations on Minimum Distance Criteria and the adoption of the Cane Price Formula have been delegated to state governments for acceptance and implementation as they see fit.
• The Union Government has agreed to enhance the Minimum Selling Price (MSP) of Sugar from Rs. 29 to Rs. 31 for the 2019-20 fiscal year in order to aid Sugar farmers and to discharge their arrears/cane dues.
• Aside from that, the government has created incentives for the production of ethanol from B-heavy molasses and cane juice in order to redirect sugar surpluses to biofuel production, so indirectly increasing sugar prices.
• The new Biofuel Policy of 2018 has set a target of mixing 20% ethanol with gasoline by 2030.

Biofuel Policy of 2018

• Sugarcane juice, sugar-containing materials like Sugar Beet, starch-containing materials like Cassava, damaged food grains like broken rice, and rotting potatoes that are unsuitable for human consumption are now allowed to be utilised as raw materials for ethanol manufacturing.
• The policy permits surplus food grains to be utilised in the manufacturing of ethanol that may be blended with gasoline.
• This is to ensure that during the surplus production phase, farmers receive a fair price for their crops.
• In addition to increased tax advantages and a higher purchase price than 1G biofuels, the policy specifies a viability gap finance plan for 2G ethanol Bio refineries of Rs.5000 crore over 6 years. AdvancedBiofuels are emphasised in the policy.
• The Policy encourages the establishment of supply chain mechanisms for biodiesel generation from non-edible oilseeds, spent cooking oil, and short-gestation crops.
• To promote synergy in the efforts, the Policy outlines all of the tasks and responsibilities of the involved Departments/Ministries with regard to biofuels.

Rangarajan Committee report

• The Rangarajan Committee was established in 2012 to provide suggestions on sugar sector regulation.
• Its main proposals are to abolish quantitative limitations on sugar export and import and replace them with suitable tariffs.
• There should be no more outright prohibitions on sugar exports, according to the committee.
• The central government has mandated a minimum radial distance of 15 kilometres between any two sugar mills; this condition frequently results in a virtual monopoly over a vast area, giving mills disproportionate control over farmers. The Committee suggested that the distance standard be re-examined.
• The selling of by-products should be unrestricted, and pricing should be established by the market.
• States should also alter their policies to allow mills to use bagasse-generated energy.
• Remove the restrictions on the distribution of non-levy sugar. The sugar mills' financial health will improve if these regulations are removed.
• As a result, farmers will get timely payments and cane arrears will be reduced.
• The Commission for Agricultural Costs and Prices (CACP) advocated a hybrid approach to sugarcane price fixing based on the findings, which included a fair and remunerative price (FRP).

Fair and Remunerative Price (FRP)

• The minimal price that sugar mills must pay to farmers is known as the FRP.
• It is set based on the Commission on Agricultural Costs and Prices (CACP) recommendations and after consultation with state governments and other stakeholders.
• Farmers in Uttar Pradesh, Punjab, Haryana, Tamil Nadu, and Uttarakhand get the State Advised Price (SAP), which is normally higher than the FRP, set by state governments.

Way forward

• The sector requires financial injection as well as policy and structural improvements.
• Modernization of ageing mills, particularly in Uttar Pradesh and Bihar, to increase production efficiency.
• Major sugar-producing states, like Maharashtra and Karnataka, have adopted a progressive revenue-sharing system; other states should follow suit to guarantee that farmers share in the gains.
• When domestic output is anticipated to exceed domestic demand, policy modifications should be made to boost exports.
• Allowing mills to create more alcohol is a good idea (a higher value product with massive industrial demand).
• Sugar and alcohol exports should also be permitted.
• It will improve mills' financial status, allowing them to pay farmers a price based on market sugar prices.
• Sugar production costs in India are among the highest in the world. In order to boost sugarcane output in the agricultural area and adopt new production efficiency technologies in sugar mills, extensive research is necessary.
• Sugarcane research and development can assist solve concerns such as low yield and low sugar recovery rates.
• In Uttar Pradesh, for example, a new sugarcane variety (CO 238) was produced in 2016-17. (UP).
  • UP produces the majority of India's sugarcane, its portion of the country's sugar output increased from 25% to 40%.
  • This one-of-a-kind breakthrough essentially disrupted the sugar cycle, allowing India to generate surplus sugar on a constant basis.
• The cost of production can also be decreased by properly using industry by-products.
• Ethanol production should be encouraged by the government. It will reduce the country's oil import cost and aid in the conversion of sucrose to ethanol, as well as balancing off the country's surplus sugar output.

Conclusion

The sugar business is a significant agro-based sector that has an influence on the rural livelihoods of over 50 million sugarcane farmers and around 5 lakh sugar mill workers. Various ancillary activities such as transportation, trade servicing of machinery, and the supply of agricultural inputs also generate employment. After Brazil, India is the world's second largest producer of sugar and the world's largest consumer. The yearly production of the Indian sugar industry is currently valued at over Rs.80,000 crores.