India is the largest sugar-producing nation in the world but the country lies behind Brazil in terms of sugar exports. Since the production of sugar in India begins in October, October to September is regarded as the sugar season.
The country’s sugar exports have increased by 20 times in the previous 6 years whereas production of ethanol (a by-product from sugar) has increased 10-fold in the past 9 years.
Farmer’s Dues
The increased production of sugar and ethanol has in turn helped the country’s sugar mills become “self-reliant” and make the process of payments of dues to farmers faster. As per data from the Government of India (GoI), sugarcane dues to farmers during the 2020-21 and 2021-22 seasons have reduced and have come down to barely 0.1% and 0.2% respectively.
Previously, this was not the case. Farmers’ dues used to remain as it is for years since the sugar mills faced financial difficulties, and protests for the payment of arrears were frequent in the major sugar-producing states.
Subodh Kumar Singh, the Joint Secretary of the Food Ministry said that millers have paid Rs 92,987 Cr. against Rs 93,075 Cr. to sugarcane farmers for the 2020-21 sugar season which leaves barely Rs 88 Cr. outstanding. For 2021–2022 as well, farmers received payments totaling Rs. 1.16 lakh Cr., with another Rs. 2,310 Cr. still outstanding.
The government’s actions, according to the food ministry, have benefited both the industry and farmers. These actions include establishing a minimum selling price of sugar at mills to prevent cash flow losses, diverting excess sugar for ethanol, and providing incentives for sugar exports.
Benefits To Mills From Higher Exports And Ethanol Production
According to official statistics, the sale of ethanol to oil marketing companies (OMCs) has brought in about Rs 77,000 crore for sugar mills and distilleries since 2014. Between 2013–14 and 2021–22, ethanol production and supply to OMCs increased from 38 crore liters to 408 crore liters. In its presentation, the Food Ministry also mentioned “There has been a complete transition of the sugar industry from the food sector to the energy sector.”
Similar to how it did with the surplus sugar, the government has so far given mills Rs 18,000 crore in assistance to help them create buffer stocks and export extra sweetener. The government no longer offers any financial support as sugar export has become profitable for the sector.
India’s sugar exports have gone up from about 50,000 tonnes in 2016-17 to 110 lakh tonnes in 2021-22. The government has approved the export of 60 lakh tonnes for the current fiscal year. Sanjeev Chopra, the union’s food secretary, said this week that the government will decide whether to raise the sugar export quota next month after examining domestic production and internal demand.
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