A Sugar Industry Perspective

India is the largest producer of sugar in the world. In terms of sugarcane production, India and Brazil are almost equally placed. In India, about 60% of cane is utilized for the production of sugar, about 30% for alternate sweeteners, namely gur and khandsari , and the balance 10% for seeds. In Brazil, out of the total cane available for crushing, 45% goes for sugar production and 55% for the production of ethanol directly from sugarcane juice. This gives the sugar industry in Brazil an additional flexibility to adjust its sugar production keeping in view the sugar price in the international market as nearly 40% of the sugar output is exported.

The annual projected growth rate in the area under sugarcane at 1.5% per annum has doubled during the last five years. This is because it is considered to be an assured cash crop with good returns to the farmers vis-a-vis other competing crops.

India is currently passing through a glut situation with closing stocks at the end of the year of over 100 lakh tons since 1999-2000. Correspondingly, molasses production has also increased. The table below gives the production of molasses, alcohol utilization by the alcohol-based chemical industry, potable sector and the surplus at the end of each year. It is therefore evident that along with sugarcane production, phenomenal growth is also taking place in the production of molasses, the basic raw material for the production of ethanol from sugarcane. Of course, there are also other agro routes available to produce ethanol.

According to MPNG, 5% ethanol blends on an all-India basis would require 500 million liters. The current availability of molasses and alcohol would be adequate to meet this requirement after fully meeting the requirement of the chemical industry and potable sectors.

Availability
In the absence of a well knit policy in the past for purchasing and blending ethanol, not many distilleries have been producing ethanol. Only three distilleries attached to sugar mills had war years’ experience, and were able to gear themselves up to supply ethanol immediately. Now, about 11 factories in Uttar Pradesh will be adding facilities to produce about 75 million liters of anhydrous alcohol by end-September; 7 units in Tamil Nadu (production capacity of 62.5 million liters of anhydrous alcohol); 8 in Karnataka (anhydrous alcohol production capacity of 66.5 million liters); and 4 units in Andhra Pradesh (capacity of over 40 million liters). Similar steps have also be taken up by the cooperative sector units in Maharashtra, Punjab and UP. By the end of the year it is estimated that about 300 million liters capacity would have been created for the production of anhydrous alcohol.

As capacities are built up, the oil sector should also be able to generate that much demand for ethanol to guard against any idling capacity. The Petroleum Ministry may therefore like to look into this matter and ensure that the oil sector speeds up the creation of requisite facilities for blending ethanol with petrol. So far generation of demand for ethanol has been very low and it takes considerable time for IOC’s units to finalize purchase of ethanol against offers made by distilleries in response to their tenders.

In the Indian Sugar Mill Association, this matter was recently examined and it was concluded that instead of taking up the scheme on a state-wise basis, it would be appropriate to take it up in metropolitan and other cities where environmental pollution is a major concern. The blending should be taken up to 10% and introduced selectively to make a better impact on the environment, as no changes in the engine or carburetor are required, and other countries are already carrying this out successfully.

Cost
There is considerable scope for further reduction in the cost of production of both sugarcane and sugar in India with liberalization of controls on the sugar industry. Consolidation of land holdings and corporate farming on the raw material side and expansion of capacity on the unit size are important developments and would lead to substantial improvements in productivity, thereby rendering India a cost-effective producer of sugar in the world.

The area under sugarcane is presently less than 2% of total cultivable area in the country and about 3% of the irrigated area. There is considerable scope for increasing the area under sugarcane considering the fact that it is more profitable compared to other crops. The Planning Commission has visualized a conservative increase in area under sugarcane by 6 lakh hectares during the 10th Plan period., but considering past trends, the area under cane is likely to exceed 5 million hectares (see table above).

During the 10th Plan period, the annual incremental growth in consumption has been estimated at 9 lakh tons per annum. For the first time the Indian Government has fixed a target of 15 lakh tons per annum for export for this period. However, the production target was fixed at 21.3 million tons keeping in view the large carry forward stocks at the beginning of the period and to correct the demand-supply distortions presently caused. These targets are achievable looking at the performance of the industry in the past with a production of 18.5 million tons achieved in 2000-01.

Conclusion
In conclusion, the sugar industry will not be lacking in meeting the requirement of ethanol. In a market economy. there would be a considerable shift from the gur and khandsari sectors which are inefficient producers with poor quality. In the current scenario of glut in sugar production, it may be advisable to divert such additional cane for the production of alcohol after meeting the sweetener requirement. The additional availability of alcohol on the assumption that the entire cane is utilized for the production of sweeteners will be about 200 million liters over and above that indicated in the table. Alternatively, if additional cane available is utilized for the production of alcohol to bring in a balance in the demand and supply of sugar, the alcohoI production at the end of the 10th Plan would be around 1,485 million liters.

Such a flexibility has become very relevant in the current scenario of economy liberalization and more particularly as a means to correct the aberrations in sugar production.

Alcohol Production
(in million liters)
Alcohol Year	Molasses Prod.	Production of Alcohol	Industrial Use	Potable Use	Other Uses	Surplus Availability
1998-99	7.00	1411.8	534.4	5840	55.2	238.2
1999-00	8.02	1654.0	518.9	622.7	576	455.8
2000-01	8.33	1685.9	529.3	635.1	588	462.7
2001-02	877	1775.2	5398	647.8	59.9	527.7
2002-03	9.23	1869.7	550.5	660.7	61.0	597.5
2003-04	9.73	1969.2	578.0	693.7	70.0	627.5
2004-05	10.24	2074.5	606.9	728.3	73.5	665.8
2005-06	10.79	2187.0	619.0	746.5	77.2	742.3
2006-07	11.36	2300.4	631.4	765.2	81.0	822.8

Year	Area Under Cane	Cane Prod.	Cane Utilization			Sugar Production		Addl. Alcohol Prod. (in million liters)
			Sugar	Gur & Khand.	Seed & Chew	Target	Revised Prod.	From Addl. Molasses Prod.	Addl. Cane Available for Alcohol Prod.
2002-03	4.36	309.9	181	92.0	37	182	192	69	475
2003-04	4.53	321.6	188	95.6	38	192	202	99	795
2004-05	4.63	333.3	195	98.3	40	199	212	128	1000
2005-06	4.79	345.1	202	102.1	41	206	223	168	1222
2006-07	4.96	356.8	209	104.8	43	213	233	198	1485

Caption:
Projection made in the 10 th five year plan. Projections relating to cane production area, drawal of sugarcane by the sugar sector are as per the target visualized in the 10th Plan.

Courtesy: Mr Ashok K Goel, President, Indian Sugar Mills Association (ISMA), The Dhampur Sugar Mills Ltd, 221,
2nd Floor, Okhla Industrail Estate III, New Delhi 110020;
Ph: 91 011 691 0642, 691 0458; Fax: 91 011 6910507
Mr Ashok Kumar Goel is Vice Chairman of the Dhampur Sugar Mills Group. He has been actively involved in the development and growth of all aspects of the sugar Industry. He was the Chairman of the Coordination Committee of the U.P. Sugar Mills Association for 6 years and is currently the President of the Indian Sugar Mills Association as well as the Chairman of the Indian Sugar Exim Corporation Ltd.