The government of India is taking proactive measures to boost the export of surplus sugar & diversion of sugar to ethanol to ensure timely payment of cane dues of sugarcane farmers and to boost the agricultural economy. In the past few years, sugar production in the country has been more than domestic consumption. Central Government has been encouraging sugar mills to divert surplus sugar to ethanol & has been providing financial assistance to sugar mills to facilitate the export of sugar, thereby improving their liquidity, enabling them to make timely payments of cane price dues of sugarcane farmers.
In last 3 sugar seasons 2017-18, 2018-19 & 2019-20, about 6.2 Lakh Metric Tonne (LMT), 38 LMT & 59.60 LMT of sugar has been exported. In the current sugar season 2020-21 (Oct – Sept.), the Government is providing assistance @ 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 & more than 55 LMT has been physically exported from the country, as on 16.8.2021.
Some sugar mills have also signed forward contracts for export in the ensuing sugar season 2021-22. Export of sugar has helped in maintaining demand-supply balance and stabilizing domestic ex-mill prices of sugar.
In order to find a permanent solution to deal with the problem of excess sugar, the 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 the sale of ethanol by mills also helps sugar mills in clearing cane price dues of farmers. In the last 2 sugar seasons 2018-19 & 2019-20, about 3.37 LMT & 9.26 LMT of sugar has been diverted to ethanol. In the 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; & 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 2-3 years.
In the 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 cr revenue is being generated by sugar mills from the 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 crores cane dues were payable, out of which Rs. 75,703 crore has been paid & only Rs. 142 crore arrears are pending. However, in the current sugar season 2020-21, sugarcane is worth about Rs. 90,872 crores have been purchased by sugar mills which is the record highest, against which about Rs. 81,963 crores cane dues have been paid to farmers and only Rs. 8,909 crores cane arrears are pending, as of 16.08.2021. An increase in export & 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 the demand of Indian raw sugar in the international market is very high accordingly, an advisory has been issued by the 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 &should sign forward contracts with the importers to take advantage of high international prices of sugar & global deficit. Sugar mills which will export sugar and would divert sugar to ethanol would also be given incentives in the form of an additional monthly domestic quota for sale in the domestic market.
Diversion of maximum sugar to ethanol & 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 stabilizes ex-mill price of sugar in the domestic market, which in turn will further improve the revenue realizationof sugar mills& 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.