New Delhi: Through the country’s sugar industry, every year millions of rupees are being paid in the form of tax to Centre and state government. Approximately two to three million households in the country are directly or indirectly are dependent on the sugar industry. A fact cannot be denied that the sugar industry has played a vital role in strengthening the rural economy of the country. India ranks second after Brazil in sugar production in the world, and it is expected that this year our country is likely to overtake Brazil in production numbers. This has underscored the importance of the sugar industry in the country’s economy.
Record break sugar production in the country
India has produced record-break 322 lakh tonnes of sugar in the 2017-2018 season. Till October 1, 2018, there was a carriage stock of 39 million tonnes of sugar in the country. Except for the surplus stock, an additional 361 lakh tonnes of sugar is ready in the country. In the year 2017-2018, the total domestic consumption of sugar in the country was approximately 250 lakh tonnes.
Till October 1, there were about 100 to 110 lakh tons of sugar left. The result of this excess sugar production has been consistently in the domestic market for the last one year. That is why in September 2017, the counterfeit prices of the domestic market fell to Rs. 35 to 36 rupees per kg by 25 rupees per kg till 2018.
The hurdle in sugar factories ‘balance sheet’
Due to the decline in the prices of sugar, the balance sheets of sugar mills have been affected, and it has become difficult for the factories to give FRP to the farmers. To bring the sugar industry out of the crisis, the central government has ordered sugar mills for maintenance of 3 million of sugar as a buffer stock. Following which sugar mills have decided to export. Monthly sales quota was determined by each factory to balance the demand and supply and to maintain a market rate of sugar. At the same time, a minimum selling price of sugar was RS 29. In order to export sugar to the international market, the subsidy was given too.
Government to help to increase in production of ethanol
To reduce the additional production of sugar and bring out sugar mills out of the crisis, the central government has extended help to support in ethanol production. The ethanol procurement rate was increased by around 5 per cent. For the modernisation, expansion of distillery of sugar mills, various schemes have been introduced.
The central government is sensitive towards sugar prices
Due to the inclusion of sugar in the list of essential commodities; the central government is always sensitive to sugar prices. Sugar growers should get proper prices of sugarcane growers, and there is no reason to feel dissatisfied with it.
Similarly, as the government decides the rate of sugarcane, the government has to determine the rate of sugar based on its production. 35 per cent of the total sugar sold in the country is used for general consumers and 65 per cent for industrial purposes like beverages, dessert, ice cream.
Economic of sugar factories collapse
Due to increase in the sugarcane and sugar production expenditure, the economy of sugar factory has collapsed. It has affected due to various factors such as transportation expenditure, labour cost and others. At the same time, the Agriculture Commission has fixed the FRP rate of sugar Rs 2,750 per quintal. In the present situation, the sugar factories have been forced to pay the price.
Sugar prices collapse; export is the only solution
At present, raw sugar is Rs 1,700 per quintal in the international market and white sugar Rs 1,900 per quintal. Due to the decline in global sugar prices, Brazil has switched his mode for ethanol production. However, in the past few months, crude oil prices have been declining rapidly in international markets. Therefore it has affected Brazil’s plan for ethanol production. On this backdrop, Brazil is likely to face sugar production again. It will result in the international market rate of sugar. Therefore, now the sugar factories need to come forward for export. Sugar mills have to low down the pressure of sugar stock and pave the way for export, in order to get a good amount of sugar price in the domestic market. This will also help millers to clear the FRP to farmers and other remaining arrears.