Tamil Nadu has a long history of producing sugarcane and cane sugar. The Sugarcane Research Institute in Coimbatore has been working on increasing cane yields and developing cane with high sucrose content appropriate for crushing in different months.
For decades Parrys had a profitable record of sugar production. Well-organised cultivation of sugarcane and close interaction with farmers to improve productivity through extension services encouraged a new generation of entrepreneurs to invest in the sugar industry.
The state government’s support came in the form of easy term loans and equity, and soon Tamil Nadu emerged as a large producer of sugar.
The industry is cyclical with a boom followed by a slump. Over the last five years, sugar production has been consistently in excess of consumption. In the current year, the stock of production is estimated at 248 lakh tonnes. The Indian Sugar Mills Association estimates surplus of over 90 lakh tonnes and suggests export of at least 40 lakh tonnes.
Sugar mills in Tamil Nadu have been affected due to high cane prices and unremunerative sugar prices. The result: mounting arrears of payments to cane farmers. As a consequence, there is a steep decline in the area under cane from 3.35 lakh hectares to 2.55 lakh hectares over the last three years.
Naturally cane production dropped from 353 lakh tonnes to 217 lakh tonnes and sugar production from 24 lakh tonnes to 13 lakh tonnes. In this period, Maharashtra, UP and Karnataka registered significant increases in sugar production.
Barter sugar for edible oil
We spoke to sugar baron S V Balasubramaniam (SVB), Chairman, Bannari Amman Sugars (BAS). BAS has been a leader in high quality sugar production with five mills spread across Tamil Nadu and Karnataka, with a total crushing capacity of 21,500 tonnes of cane per day. Production is well-integrated with distilleries, co-generation of power and bio-compost. BAS and allied companies of the group are engaged in the production of granite, power, transportation and non-conventional energy. The company also has a bio-diesel plant that produces 3000 litres of bio-diesel per day. The group’s CSR activities extend to water conservation (SVB is among the promoters of Siruthuli) and clean environment.
On the current state of the sugar industry, SVB said that India has to tackle surplus sugar: “out of 40 lakh tonnes of sugar that can be exported, we export only 8 lakh tonnes. Thus, there is a huge burden of inventory and a crash in sugar prices.”
SVB suggests bartering our surplus sugar with commodities we import from neighbouring countries. He points to the huge imports of edible oil from Malaysia and asks why we should not stipulate the obligation to pay for it through export of sugar. He expresses the hope that Prime Minister Modi’s efforts will help export sugar to SAARC countries through such barter.
SVB suggests rationalisation of tax structure that will help increase production of molasses and hence ethanol; and an increase in the mandatory blend of ethanol from the present 5 per cent to 10 per cent.
Brazil for long has been effectively using ethanol for powering automobiles. In recent years, the US is marching towards self-sufficiency in its fuel needs by converting millions of tonnes of corn to ethanol. SVB’s track record shows that Tamil Nadu can lead in this effort as well.