Blog

January 20 2022

Sugar and SugarCane Policy

There are 732 installed sugar factories in the country as on 31.07.2017, with sufficient crushing capacity to produce around 339 lakh MT of sugar. The capacity is roughly distributed equally between private sector units and co-operative sector units. The capacity of sugar mills is, by and large, in the range of 2500 TCD-5000 TCD bracket but increasingly expanding and going even beyond 10000 TCD. Two standalone refineries have also been established in the country in the coastal belt of Gujarat and West Bengal which produce refined sugar mainly from imported raw sugar as also from indigenously produced raw sugar.

The sector-wise break-up of sugar mills in the country is as given below:

* Includes each refinery in West Bengal & Gujarat.

With the amendment of the Sugarcane (Control) Order, 1966 on 22.10.2009 and the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the ‘Fair and Remunerative Price (FRP) of sugarcane for 2009-10 and subsequent sugar seasons. The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) after consulting the State Governments and associations of sugar industry. The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:-

(a)Cost of production of sugarcane

(b)Return to the growers from alternative crops and the general trend of prices of agricultural commodities

(c)Availability of sugar to consumers at a fair price

(d)Price at which sugar produced from sugarcane is sold by sugar producers

(e)Recovery of sugar from sugarcane

(f)*The realization made from the sale of by-products viz. molasses, bagasse and press mud or their imputed value

(g) **reasonable margins for the growers of sugarcane on account of risk and profits

Under the FRP system, the farmers are not required to wait till the end of the season or for any announcement of the profits by sugar mills or the Government. The new system also assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not and is not dependent on the performance of any individual sugar mill.

In order to ensure that higher sugar recoveries are adequately rewarded and considering variations amongst sugar mills, the FRP is linked to a basic recovery rate of sugar, with a premium payable to farmers for higher recoveries of sugar from sugarcane.

Accordingly, FRP for 2017-18 sugar season has been fixed at Rs. 255 per qtl. linked to a basic recovery of 9.5% subject to a premium of Rs.2.68 per qtl for every 0.1 percentage point increase above that level.

The FRP of sugarcane payable by sugar factories for each sugar season from 2009-10 to 2017-18 is tabulated below:-

January 20 2022

The sugar industry

maheshwari@ Blog

Sugar industry is an important agro-based industry that impacts rural livelihood of about 50 million sugarcane farmers and around 5 lakh workers directly employed in sugar mills. Employment is also generated in various ancillary activities relating to transport, trade servicing of machinery and supply of agriculture inputs. India is the second largest producer of sugar in the world after Brazil and is also the largest consumer. Today the Indian sugar industry’s annual output is worth approximately Rs.80,000 crores. There are 732 installed sugar factories in the country as on 31.07.2017, with sufficient crushing capacity to produce around 339 lakh MT of sugar. The capacity is roughly distributed equally between private sector units and cooperative sector units.

The sugar industry subsumes the production, processing and marketing of sugars (mostly saccharose and fructose). Globally, most sugar is extracted from sugar cane (~80 % predominantly in the tropics) and sugar beet (~ 20%, mostly in temperate climates like in the U.S. or Europe).

Sugar is used for soft drinks, sweetened beverages, convenience foods, fast food, candy, confectionery, baked products, and other sweetened foods. Sugarcane is used in the distillation of rum.

Sugar subsidies have driven market costs for sugar well below the cost of production. As of 2018, 3/4 of world sugar production was not traded on the open market. The global market for sugar and sweeteners was some $77.5 billion in 2012, with sugar comprising an almost 85% share, growing at a compound annual growth rate of 4.6%.

Globally in 2018, around 185 million tons of sugar was produced, led by India with 35.9 million tons, followed by Brazil and Thailand. There are more than 123 sugar-producing countries, but only 30% of the produce is traded on the international market.

January 20 2022

The sugar stock market update

maheshwari@ Blog

Sugar industry is a big business in India. Around 525 mills produced more than 30 million tonnes of sugar in the last crushing season, which lasted from October to April. This makes it the world’s largest producer, unseating Brazil. Some 50 million farmers and millions of more workers are involved in sugarcane farming. India is the world’s largest consumer of sugar. According to data from the Indian Sugar Mills Association, the country’s sugar mills produce 268.21 lakh (26,821,000) tonnes of sugar between October 1, 2019 and May 31, 2020. Sugar stocks were trading higher on 4th february

Sugar cane is a very important input for making sugar . When production of sugarcane increases, sugar production also increases. Sugar cane’s production increased from 110 million tonnes in 1961 to 405 million tonnes in 2019. Sugar cane is grown from 2413 thousand hectare in 1961 to 5061 thousand hectare in 2019. Production quality for sugar cane is also increased. Production quantity improved from 45 tonnes/hectare to 80 tonnes/hectare.

Dhampur Sugar Mills(up 3.98%), Bannari Amman Sugars(up 2.79%), Uttam Sugar Mills(up 2.44%), Triveni Engineering & Industries(up 2.30%), DCM Shriram Industries(up 1.96%), AVADHSUGAR(up 1.92%), Dalmia Bharat Sugar & Industries(up 1.84%), Dwarikesh Sugar Industries(up 1.32%), EID Parry(up 1.13%) and MAGADHSUGAR(up 1.03%) were among the top gainers.

Dharani Sugars & Chemicals(down 1.68%), Simbhaoli Sugars(down 1.21%), Ponni Sugars(Erode)(down 0.98%), BAJAJHIND(down 0.60%) and Kothari Sugars & Chemicals(down 0.39%) were among the top losers.