Wind power - growing energy source
The sugar sector is pinning hopes on the Government's gasohol policy that allows mixing of five per cent ethanol with petrol to bail it out from the current problems.
Sources from the industry said that only direct conversion of cane to ethanol will help sugarcane factories. But that had been hampered by the slow progress of ethanol purchase tenders.
The total consumption of ethanol, taking into consideration the annual offtake of 10 million kilolitres of petrol, has been estimated at 500 million litres. The sugar sector feels the consumption can be doubled to one billion litres by increasing the dope content to 10 per cent.
The industry also said that IOC had floated a tender to buy 23 million litres but nothing had been finalised till date.
The sugar factories are facing problems in selling the produce to the domestic and global markets. In the domestic market, the prices have fallen after the Government abolished the system of releasing the sales quota on a monthly basis. Moreover, with the control on the industry set to go fully soon, chances of domestic prices ruling higher are remote.
Things are not bright on the export front also. Prices have fallen steeply and factories would incur losses if they export at the current rates.
According to Mr S.L. Jain, Secretary-General of the Indian Sugar Mills Association, mills had a good opportunity to export during January-March this year. But these mills withdrew their offers expecting the Government to announce transport subsidy. Now the prices have declined sharply so that the $8-10 per tonne transport subsidy would not be enough.
Spot sugar prices, which were ruling at over $250 a tonne free-on-board (f.o.b.) London in February, have now declined to $215.50. In future, August contracts are being quoted at a low of $184.50 f.o.b. a tonne on hopes of a huge crop from Brazil.
Jain said that they could have exported 6.5-7 lakh tonnes during the period when Brazil was not in the market. He felt that for the entire crop year (October 2001-September 2002), they would be able to barely touch seven lakh tonnes.
This is against 12.5 lakh tonnes exports during the 2000-01 season, while during October-February this season, only 3.9 lakh tonnes were exported. The lower exports are also due to Pakistan, which bought significant quantity last year, clamping an import duty of 30 per cent specifically to stop Indian shipments. The sector is also up against two things - one, the prospect of a bumper crop in 2002-03 season and, two, all cane being diverted to the mills.
Despite a fall in production in Maharashtra, sugarcane production will be up this year as more and more growers are turning to the crop. In Uttar Pradesh, production will be up five per cent and next year too, it will increase by the same margin. Sugar production is expected to be 165 lakh tonnes this season against a record 184.50 lakh tonnes the previous season. During 2002-03, as per projections, it is expected to be over 170 lakh tonnes.
According to the sources, more growers are turning to sugarcane due to increase in the minimum support price (MSP). While the MSP for sugarcane fixed by the Centre for 2001-02 is Rs 620.50/tonne, the growers are paid higher due to the State Governments announcing advisory prices (SAP). Uttar Pradesh's SAP ranges from Rs 980 to Rs 1,000 a tonne based on recovery, while in Haryana, it rules at Rs 750-1,100. In the southern States, it is between Rs 750 and Rs 780.
Also, with gur and khandsari units falling sick, all sugarcanes are being diverted to factories leading to a glut. In States such as UP, nearly 50 per cent of the sugarcane produced is diverted to gur and khandsari units as this sector does not pay any tax on cane purchase and the final product.
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