In past few years, sugar production in the country has been more than the domestic consumption. Central Government has been encouraging sugar mills to divert surplus sugar to ethanol and 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.
In last 3 sugar seasons 2017-18, 2018-19 and 2019-20, about 6.2 Lakh Metric Tonne (LMT), 38 LMT and 59.60 LMT of sugar has been exported. In the current sugar season 2020-21 (October – September), Government is providing assistance at of Rs 6000/MT to facilitate export of 60 LMT of sugar.
Against the export target of 60 LMT, contracts of about 70 LMT have been signed, more than 60 LMT has been lifted from sugar mills and more than 55 LMT has been physically exported from country, as on August 16, 2021.
Some sugar mills have also signed forward contracts for export in ensuing sugar season 2021-22. Export of sugar has helped in maintaining demand-supply balance and stabilising 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.
In last 2 sugar seasons 2018-19 and 2019-20, about 3.37 LMT and 9.26 LMT of sugar has been diverted to ethanol. In current sugar season 2020-21, more than 20 LMT is likely to be diverted. In the ensuing sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted; and by 2024-25 about 60 LMT of sugar is targeted to be diverted to ethanol, which would address the problem of excess sugarcane/ sugar as well as delayed payment issue 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 crore 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 crore cane dues were payable, out of which Rs 75,703 crore has been paid and only Rs 142 crore arrears are pending.
However, in the current sugar season 2020-21, sugarcane worth about Rs 90,872 crore has been purchased by sugar mills which is the record highest, against which about Rs 81,963 crore cane dues have been paid to farmers and only Rs 8,909 crore cane arrears are pending, as on August 16, 2021. Increase in export and diversion of sugarcane to ethanol has expedited cane price payments to farmers.
The international prices of sugar have increased substantially in past one month and demand of Indian raw sugar in the international market is very high accordingly, an advisory has been issued by 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 and should sign forward contracts with the importers to take advantage of high international prices of sugar and global deficit.
Sugar mills which will export sugar and would 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 and 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 stabilises ex-mill price of sugar in the domestic market, which in turn will further improve the revenue realisation 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.