“ Sugar Sector In India,Maharashtra – Need to Reform & organize to become highly efficient ”
Latest data of sugar & sugar cane
Production in world.
Current scenario of production in world is explained below where India is 2nd largest producer of Sugar & 1st in consumption among all countries.
Source: http://en.wikipedia.org
World sugar
production (1000 metric tons)
World sugar Consumption (1000 metric tons)
Every
year in Maharshtra “ऊस आंदोलन- Sugarcane Movement/Protest” is going on for
the right of farmers, to get worth rate of their sugarcane from sugar mills.
But no permanet
solution bring forward from Govt. To resolve farmer problems & to boost
sugar co-operative sector.
Current Sugar Sector Issues & recommendations:
The Commission CACP recommends a fair and remunerative price
(FRP) for sugarcane for the sugar season 2013-14 to be Rs 210/qtl at 9.5
percent recovery level.
Any product processed from raw material has finished goods as well
as by products & remaining scrap. Normally value of this additional/by products
consider in a profit in cost sheet.
In sugar production also profit from by products (molasses,
bagasse and press mud) produced from a quintal of sugarcane should be shared
between farmers and millers in relative ratio.These relative costs (average of
three years, 2007-09) suggest a ratio of 69:31 percent at 10.31 percent
recovery level. If one loads the value of by-products on to the value of sugar,
then the farmer will get 75% of the value of sugar (at 10.31% recovery level).
CACP mention in
their report as example,
If the ex-mill
price of sugar in sugar season 2013-14 works out to Rs 3350/qtl (middle of the
range of Rs 3000-3700/qtl expected to prevail in 2013-14), the price of
sugarcane would be Rs {3350x(10.31/100)*(75/100)} = 259/qtl at all India
recovery level of say 10.31.
For states with higher recovery, say Maharashtra at 11.30% recovery, it
would work out to {3350x(11.30/100)*(75/100)} = Rs 284/qtl.(Rs.2800/tonn)
·
Non-Price
Recommendations from CACP
1. Like in our private sector has
right to control their business & build efficient model as per market
situations. Same reformation in sugar sector has to implement from delicensing to decontrol, so that it can
be developed as an energy hub producing sugar, ethanol from molasses, and power
from bagasse, creating jobs and enhance income of millions of farmers in rural
areas.
2. The sugar factories are under
obligation to give a certain percentage of their sugar production to the
Government as levy sugar for the purpose of the public distribution system
(PDS)/BPL families at a price fixed by the Government which is lower than the
open market price. This price difference-amount comes
on sugar factory, but which gets transmitted either to the farmer by paying less
returns or to the consumers of non-levy sugar as their price for sugar goes up.Currently,
the levy price is about Rs 18/kg vis-à-vis an ex-factory price of more than Rs
30/kg, leading to an ‘implicit tax’ of more than Rs 3000 crores on sugar
mills/farmers/non-levy sugar consumers.
3. Sugar, manufactured during five to
six months during the sugar season(October to September), is controlled and
regulated by Central Govt. to be sold and distributed in a staggered manner
with certain stated objectives. After all their high volatility in sugar prices
seen.There is ample evidence that ‘license-control raj’ leads to more ‘rent
seeking’and stifles efficiency. The Commission recommends abolishing controlled
release mechanism of non-levy sugar.
From 1990-91 to 2011-12 Data shows,
During 2000s, however,it seems the production cycles
have changed to three years upswing and two years downswing.
This is a major problem within the sugar sector, which
causes uncertainty to farmers and millers alike. This happens despite the fact
that this sector is heavily regulated by the government in terms of levy of
sugar, monthly releases of non-levy sugar, imports and exports, and pricing of
cane, etc.
Below is Price of Cane for farmers after adopting new model to give some ratio by product profit to farmers:
Above highlighted Price Max. Rs. 2491/Ton returns to farmer -- shows for Maharashtra state has recovery around 11.5% & for the ex-mill price of 2825.
Govt. has to work on different parameters & Sugar sector should come out to become competitive in market & adopt global business strategies which lead them to run profitable efficient industry.
In next article we will see insight of Brazil sugar sector & returns/revenue to sugar cane growers.
Sources:
- Commission for Agricultural Costs and Prices (CACP),Ministry of Agriculture, Govt. Of India.
- Wikipedia
