Government of India is taking proactive measures to boost export of surplus sugar & diversion of sugar to ethanol to ensure timely payment of cane dues of sugarcane farmers and to boost agricultural economy. In the past few years, sugar production in the country has been more than the domestic consumption. The Central Government has been encouraging sugar mills to divert surplus sugar to ethanol & has been providing financial assistance to sugar mills to facilitate export of sugar, thereby improving their liquidity, enabling them to make timely payment of cane price dues of sugarcane farmers.
Balance Sheet for Sugar Season 2021-22
Exports and Outlook
Export of sugar has helped in maintaining demand-supply balance and stabilizing domestic ex-mill prices of sugar. In order to find a permanent solution to deal with the problem of excess sugar, 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; revenue generated from sale of ethanol by mills also helps sugar mills in clearing cane price dues of farmers.
Diversion of Sugar to Ethanol
Diversion of sugar to ethanol would address the problem of excess sugarcane/ sugar as well as delayed payment issues because farmers would get paid immediately . However, as the adequate ethanol distillation capacities would be added by 2024-25, therefore, export of sugar will continue for another 2 to 3 years. In past 3 sugar seasons about Rs. 22,000 crore revenue was generated by sugar mills/ distilleries from sale of ethanol to Oil Marketing Companies (OMCs). In the current sugar season 2020-21, about Rs. 15,000 cr revenue is being generated by sugar mills from sale of ethanol to OMCs which has helped sugarcane mills in making timely payment of cane dues of farmers.
In the previous sugar season 2019-20, about Rs.75,845 crores cane dues were payable, out of which Rs. 75,703 crore has been paid & only Rs.142 crore arrears are pending. However, in the current sugar season 2020-21, sugarcane worth about Rs.90,872 crores has been purchased by sugar mills which is the record highest, against which about Rs.81,963 crores cane dues have been paid to farmers and only Rs. 8,909 crores cane arrears are pending, as on 16.08.2021. Increase in export & diversion of sugarcane to ethanol has expedited cane price payments to farmers.
Global Sugar View from India Perspective
The International prices of sugar have increased substantially in the past one month and demand of Indian raw sugar in the international market is very high accordingly, an advisory has been issued by the Ministry of CAF&PD to all domestic sugar mills that they should plan for raw sugar production for export in the ensuing sugar season 2021-22 right from the very beginning & should sign forward contracts with the importers to take advantage of high international prices of sugar & global deficit.
Incentive from the Government to sugar mills for sugar exports and Diversion of sugar to ethanol
Sugar mills which will export sugar and divert sugar to ethanol would also be given incentive in the form of additional monthly domestic quota for sale in the domestic market. Diversion of maximum sugar to ethanol & export of maximum sugar would not only help in improving the liquidity of sugar mills enabling them to make timely payment of cane dues of farmers, but would also stabilizes ex-mill price of sugar in the domestic market, which in turn will further improve the revenue realization of sugar mills and would address the problem of surplus sugar. With increase in blending levels, dependence on imported fossil fuel will decrease and will also reduce the air pollution; and it will also boost agricultural economy.