To resolve the sugar industry crisis, assistance should be given to sugarcane growers to get better returns through ethanol, molasses and bagasse

In the recently held 79^th Annual General Meeting of the Indian Sugar Mills

Association (ISMA), M Srinivasan, chairman of ISMA requested the government to increase the import duty on sugar from 15% to 40% as the indigenous sugar industry was facing a glut. The wholesale sugar prices ranged between Rs30 and Rs31 per kg whereas the average cost of production actually amounted to Rs33 to Rs36 per kg!

He further went on to suggest that the government should go ahead and procure at least 20 lakh tonnes of sugar to create a strategic stockpile or reserve and use in the public distribution system to stabilise the market prices.

He reiterated that the state and the government must fully adopt the formula recommended by the Rangarajan Committee, in linking sugar cane price with realisation of the end product.

Under Sharad Pawar, the agricultural minister, a panel formed to study the deteriorating conditions found out that the sugar industry actually sought interest free loans up to Rs7,500 crore to the sugar mills and wanted the banks to restructure loans given to the sugar mills. In the AGM, Minister K V Thomas called for the diversification of the sugar industry to produce more refined and raw sugar and increase ethanol blending in petrol to 10% against the mandatory 5% as at present, which is not being fully followed.

In contrast to this claim, president of the Indian Sugar Cane Association, Kurubur Shantakumar, has stated that, according to information available, Rs3,300 crore are the arrears due to sugar cane growers in Uttar Pradesh, while estimates on all India basis amounted to around Rs6,800 crore. He feels that if the government was so keen to assist the farmers why can't the money be given to them directly against dues? Why should the money be given to the factories for such distribution? Such a move naturally follows the much talked about issue of Aadhaar IDs which can be utilised in paying out to the farmers through their bank accounts!

In the meantime, the Central Institute of Agricultural Engineering (CIAE) at

Coimbatore has developed two mechanisation packages; one for sugarcane bud chipping, which reduces the requirement of seed cane (for sowing by about 90%) while mechanical transplanter for sugarcane bud chip settlers reduces plantation cost by 40%. They have further stated that manual transplanting costs Rs9,000 per hectare and the mechanical transplanting costs only Rs5,500, which costs Rs80,000 with a payback period of 27 months. This is a recent development and it would take a few months more, possibly for the next sowing and harvesting seasons, to be able to introduce them on a large-scale. As a start, at least Tamil Nadu and Karnataka could experiment with these equipments before bringing out the same on a national level. At least a good start has been made.

In so far as the ethanol production is concerned, this is also bogged down to pricing; however, congratulations are due to Bangalore Metropolitan Transport Corporation (BMTC). It has been using ethanol for more than one year now and has been asking sugarcane growers to offer more. In fact, according to Mr Shantakumar, for every tonne of sugarcane, 90 litres of ethanol could be produced, and at the market rate of Rs50, this works out to Rs4,500 per tonne and the farmers can get a better return this way. He has submitted a memorandum to prime minister Dr Manmohan Singh that blending of ethanol should be increased to 25% to benefit everyone. It may be borne in mind that by 2017, India plans to reach a 20% blending of ethanol with petrol.

Karnataka's success is likely to have a rippling effect in both Tamil Nadu and Maharashtra taking serious steps to increase ethanol production and also thus help cane growers to get better returns through ethanol, molasses and bagasse!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)