Agri Commodities Sugar Exporters

Sugar: Commodity of Sweetness, Evolution over the years

Sugar Exporter in India

Today, India holds the coveted spot of being the largest producer of Sugar in the world. However, as “Rome was not built in a day”, similarly this remarkable feat also has its own share of ups and downs.

The history of sugar goes a long way back. Humans’ craving for sweetness has always made it a desirable commodity. Production and method of sugar, however, have evolved over the years. The first recorded instance of production has been found in the 1st century BC. It was first produced from sugarcane plants somewhere in northern India. India holds the unique distinction of finding the precise method of sugar production by pressurizing sugarcane to extract the juice. The juice is further boiled to form chunks of sugar crystals. The method employed was crude and infeasible for large-scale production. Scientific methods of production started only some around the 1920s when mills sprang around the state of Uttar Pradesh and Bihar. The scale of production was still slow and the country needed to import its annual demand from places like Japan. In 1930-31, there were approximately 29 sugar mills around the country, producing just 1 lakh tons of sugar. It was not enough to satisfy our penchant for sweetness. There was a dire need to boost up the production that too on a massive scale. Moreover, the situation also demanded an act of self-reliance or “ATMA-NIRBHAR”. The govt. was quick to identify the issue and initiate corrective measures. In the first phase, to protect the indigenous industry grant of tariff protection was provided under the “Tariff board and sugar industry protection act”. Modern units were also set up in the same period. By the year, 1935-36 annual sugar production rose to as high as approximately 9 lakhs tons. In the post-independence era, the industry was looking for some incentive and clearly laid out policies. The sugar industry was poised to take off and thankfully the government offered full support through its legislation. Besides, the licensing policy terms and conditions also were clearly laid out. Industry demand for policy direction on the location of khandsari plants within a certain distance from the sugar factories was met with open arms. The primary aim of the new policy was to promote the production of sugar and develop the industry in a tropical belt.

There were also predictable setbacks in the period with issues like fluctuating output and exploitation of farmers. Fluctuation in output was mainly due to reasons like weather conditions leading to inconsistent supply of sugarcane and preferences of the farmer for food crops. Industrial planning through the five-year plan was aimed at organizing and streamlining the whole sugar production process from demand to production requirement, needed capacity and sugar cane production. To achieve the set target, committees were formed overlooking the finer details in consultation with the industry.

The pricing of sugar has also seen a no. of changes. With the growing time, government regulation has been relaxed considering the growing economics. Till the period of mid-1960s, the industry was fully controlled. Support to farmers was of prime importance. The concept of SMP (Statutory minimum price) to provide a fixed price based on production and input cost was in place. However, the SMP was different in the case of sugar production by sugar mills and Khandsari production. The regulation resulted in the diversion of sugar cane to Khandsari production causing a decline in actual sugar production. Later on the government. adopted relaxed policy resulting in production once again increasing. As of today, India has two different systems of sugarcane price movement. The first one is co-operative mill-dominated states like Maharashtra, Karnataka, and Gujarat. In this arrangement, the sugarcane price is based on the profit-sharing formula. In the second formula, sugarcane prices are controlled and dominated by private mills. The best solutions for price control have been recommended by ’Bhargava Formula’ that leads to competitive farming and competitive pricing. In this scenario, both farmers and mill owners need to become competitive in their respective areas.
Coming to modern times, India has successfully maintained its position as a leading sugar-producing country in the world? As a matter of fact, the country surpassed Brazil as the top producer in 2018/19 by producing a mammoth 33 million metric tons. India, Brazil, Thailand, China are some of the largest producers and exporters of sugar. Some of the commonly consumed sugar in the world are white granulated sugar, powdered, superfine, coarse, sanding, Light and Dark Brown, Muscovado, free-flowing brown sugar, etc. One of the common uses of sugarcane is also for the production of ethanol which acts as a source of biofuel. As more and more countries switch to greener fuel, demand for ethanol has gone up considerably in the last few years. Diversion of sugarcane to ethanol production means a lesser quantity for sugar production. This renewed focus on Ethanol production has helped India to ramp up its export capacity. Sugar exporters in India are gearing up for a productive season of exports. India is expected to export a massive shipment of approximately 5.5 million tons.

Domestic demand for the year has been largely lukewarm. Thanks to the prevalent Covid-19 situation that forced the lockdown of the nation and economy. Domestic sugar demand is predominantly generated from industrial demands coming from service units like cafes, restaurants and food joints. The segment has been deeply affected by lockdown. Some of the domestic demand also comes from beverage companies, biscuit makers, confectionaries and cola makers. Things have started to recover in the last quarter. Industry resilience can be gauged from the fact that despite the pandemic, India is expected to export a record figure of 5.5 million tons to the global market. The industry has seen great demand from Malaysia, Iran, Indonesia, Afghanistan and Sri Lanka. Wholesale buyers of sugar across the globe are looking to Indian exporters for fulfilling the burgeoning demand.

Export of sugar happens through a no. of channels. Traditional channels of procuring the commodity are time-consuming and also risky. The involvement of middlemen and intermediaries erodes the value for the buyer. Hence, identifying the challenge trade enabling platform emerged in the market. Prominent ones are TRADOLOGIE, INDIAMART AND TRADE INDIA. TRADOLOGIE definitely occupies the pole position when it comes to trading agricultural commodities in bulk. Its trade enablement platform facilitates the transaction directly between buyers and sellers using cutting-edge technology its concept of reverse bidding ensures that the process is transparent and stakeholders get the best value out of the transaction. The platform combines the best features of legacy channels combined with its own set of benefits to deliver superior value for its customers.

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