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States sugarcane BIMARU 2021

The Hindi belt sizzles…

For years the ‘BIMARU’ states were complained of pulling down the growth indicators of the nation. It is a welcome change that these very states are undergoing spectacular transformation through the focus on development and jobs. These have the potential to catch up with other developed states like Maharashtra, Tamil Nadu and Gujarat.

The Narendra Modi-Amit Shah duo seems to have transformed the ‘BIMARU’ states of the Hindi belt into vibrant vikas-(development) focused states. For decades these states – Bihar, Madhya Pradesh (MP), Rajasthan and Uttar Pradesh (UP) – were stricken by widespread poverty, low economic growth and deficiency in education and public health. Decades of unstable administrations in most of these also denied strong, affirmative action.  These four states account for 38 per cent of the nation’s population, but 20 per cent of the nation’s GDP. Over the last decade, 2011-20, these states have been undergoing a spectacular transformation.

These states are endowed with rich natural resources, especially copious water (except western Rajasthan) and with large manpower in the working age. The trigger was provided by strong leadership committed to development. The growth in several sectors point to rapid transformation taking place.

These BIMARU states have been agrarian for centuries and seem to have been so beautifully drawn out to sizzle. Look at the record:

Wheat production in MP grew at 38 per cent p.a!

In 2019-20 MP created history emerging the largest producer of wheat as also the largest contributor to the buffer stock excelling the record of Punjab and UP. The area under wheat expanded to 102 lakh ha, a jump of 25 lakh ha and production zoomed to 33.7 million tonnes accounting for nearly a third of total wheat production. The state has huge potential to excel: its productivity at 1335t per acre is much lower than the 2027t per acre of Punjab.

During 2010-11 to 2019-20 the average annual growth in the country’s total production of wheat was around 2.5 per cent; that of MP was a whopping 38 per cent per annum!

The growth in production of wheat was quite impressive for the states of Rajasthan and Bihar also during these years – at over 5 per cent per annum, more than double the national average.

UP leads in sugar and milk production

In a separate feature we have presented the spectacular growth in the production of sugarcane and sugar by UP. With the focus on high yielding varieties with higher sucrose content, UP has re-emerged the leader in sugarcane and sugar production, overtaking Maharashtra. Unlike other sugarcane producers of  Maharashtra and Karnataka that are dependent on monsoon, UP, endowed with better irrigation facilities, has the promise of keeping India as the largest producer of sugar with handsome surpluses for exports on a sustained basis.

Bihar and Madhya Pradesh are also equally geared up for increasing the production of sugarcane and thus have the promise of keeping the production of sugar and,even ethanol as an alternate source for fuel for automobiles, at high levels.

With the production of over 30 million tonnes, UP is the largest producer of milk followed by Rajasthan.

With policy changes similar to sugar, there are bright prospects for these states contributing to India emerging a large exporter of milk and other dairy products.

Wholesome growth of the foursome

I notice a dramatic change in the performance of these states, especially in agriculture, that gives the hope and optimism for these states catching up with others. I point to not just the green shoots but solid performance in agriculture by these states over the decade 2010-20.

Madhya Pradesh recorded a huge jump in wheat production, more than four times– from 7.62 MT to 33.7 MT. Just think of the state overtaking the traditional leader, UP! There is also the doubling of pulses production from 3.3 MT to over 6 MT (2018-19). The state has maintained a consistent high rate of growth in agriculture right through this decade, certifying to the popularity of Chief Minister Shivraj Singh Chouhan.

Bihar’s performance in food production through the decade has also been impressive. During the decade rice production more than doubled from 3.10 MT to 6.5 MT and that of wheat from around 4 MT to 6.2 MT.

The largest state UP, which already had a strong base of 12 MT of rice and 13 MT of wheat production, continues to maintain growth in production (14 MT and around 33 MT – 2018-19).

During the decade Rajasthan also recorded substantial increase in the production of pulses – from 0.71 MT to 3.76 MT and of wheat from 7.21 MT to little over 10 MT, both in 2018-19.

Relate these to the more modest growth in all India production of rice – from 96 MT to 117 MT and that of wheat from 87 MT to 106 MT. Thus, the four BIMARU states accounted for a very high share of wheat, rice and pulses production.

The traditionally large food growing states like Punjab, Haryana and Andhra Pradesh recorded a slower rate of growth. This is understandable in the context of the larger base they had created earlier. They need to focus on diversification of cropping to those with higher returns.

In our January issue we have pointed to India recording handsome growth in the production of pulses ending decades of imports.

Healthy health indicators

Covid-19 seems to have helped these states sharpen their focus and their administrative efficiency. Look at the record of UP’s Project Health: “in just seven months from April to October 2020, UP expanded from 0 to 1.75 lakh Corona virus tests per day through 234 labs. By mid-October, the state has conducted 1.25 crore tests and set up 1.75 lakh Covid beds. The state is adding two AIIMS and 19 medical colleges and targets to set up one in each of the 75 districts.” A similar focus on expanding medical care is seen in the other three states as well.

Reform of labour laws…

The problem of migration of workers from these states in large numbers, to industrially developed states in the west and the south has also triggered quick action. The states have reformed their labour laws enabling greater freedom for factory owners in regard to hours of work, recruitment, retrenchment of workers… apart from more liberal incentives for investments. Several lakhs of migrant labourers who have enriched themselves with skills working in developed states, will be a ready source for recruitment at modest wages. Already one notices interest on the part of large multinationals like Samsung investing in UP.

Infrastructure expands…

The National Highway Development programme initiated by the Vajpayee government and the more recent focus on railway development and construction of expressways, airports… have been put to good use by these states. The eastern dedicated freight corridor, Kisan Expresses and other highspeed trains are bound to be of special importance to these states. There is also an impressive plan of expansion of airport services including construction of the modern Jewar airport near Delhi and the expanding number of UDAN services that are of value to these states rich with tourist attractions.

MP has been conducting Vibrant Gujarat type annual events to publicise its investment attractions. UP seems to be on an overdrive of a publicity blitz. Large advertisements in the electronic and the print media project the state’s special strengths for investments in agriculture, food processing, IT, electronics and a wide range of manufacturing industries.

The focus on infrastructure and incentives for investments through liberalised labour laws and other attractive packages, combined with the return of large sections of migrant labour, point to the prospects for rapid industrial development.

For years the ‘BIMARU’ states were complained of pulling down the growth indicators of the nation. It is a welcome change that these very states are undergoing spectacular transformation through the focus on development and jobs. These have the potential to catch up with other developed states like Maharashtra, Tamil Nadu and Gujarat:  these in fact have the potential to excel over these leveraging their endowments of human and natural resources   n

UP re-emerging leader in sugar

From 2003 to 2018 India’s sugar production has been fluctuating wildly. With UP bouncing back, there are prospects for sustained surplus production. One watches with interest how the other irrigation-rich states of Bihar and Madhya Pradesh would also increase the production of sugarcane.

Historically UP has been the largest producer of sugarcane and sugar.  But it lagged behind Maharashtra in terms of productivity. Recent efforts to introduce new varieties through research have helped giving a big boost to UP: a new variety, CO238, introduced a couple of years ago, has helped improve recovery by 2 per cent and productivity to 35 tonnes/acre. For years it used to languish at 20-22 tn/acre. Unlike other sugar producing states, UP has the advantage of abundance of water. The big growth in the last 3-4 years has helped UP emerge the largest producer of sugar accounting for half the total – around 125 lakh tonnes in total production of 250 lakh tonnes.

Look at such a dramatic development in the production of sugarcane from the northern belt. The spectacular increase both in productivity as also in recovery promise handsome surpluses in sugar production with prospects for sustained exports.

UP‘s dominance will continue with current levels of  yield and recovery. Thus India continuing as a surplus producer of sugar can continue even when Maharashtra or Karnataka’s  production drops. Thus, the old problem of maintaining sustained surplus of sugar production has ended.

Welcome prospects for sustained sugar exports

Can it help in emerging a large exporter of sugar? There are problems. 1. The cost of sugarcane in India is higher by 50-70 per cent compared to other sugar producing countries. The cost of sugarcane is 75-80 per cent in the total cost of sugar. Thus, India is uncompetitive for exports. It has to depend on subsidy for exports. In 2019-20 on the international price of Rs 22/kg, the government provided a subsidy of Rs 10.50/kg. In 2020-21, the international price is around Rs 26/kg and the subsidy is Rs 6/kg. The realisation is comparable to the average domestic price of Rs 33/kg. This correction is timely: in 2023 the WTO stipulation will end export subsidy on sugar.

The government has introduced in time a sound solution for encouraging the production of ethanol. Brazil offers a good example of producing ethanol on priority for use as fuel for automobiles: 65 per cent of production in sugar mills goes for ethanol. A new three tier system for pricing ethanol appears attractive with the lowest price offered for ethanol produced from molasses. Next comes the B-heavy conversion with higher price. 3. The highest price is paid for producing ethanol form sugarcane juice.

 India is the Number One consumer and Number Two producer of sugar in the world. Thus India’s entry into the global market has a serious impact on global prices. The focus on ethanol, an environment-friendly fuel, will give India greater oil security and help the farmer realise a better price for his produce.

From 2003 to 2018 sugar production has been fluctuating wildly. With UP bouncing there are the prospects for sustained surplus production. One watches with interest how the other irrigation-rich states like Bihar and Madhya Pradesh increase production of sugarcane. n  With inputs from Vijaya Durga & Dr K Narayanan

Interview with Ponni Sugars’ N Ramanathan

The rise and fall of sugar industry in TN

Half the sugar mills of Tamil Nadu remain closed for two years now and the other half work to less than 50 per cent capacity.  Tamil Nadu mills used to work for 240-270 days a year when most of others worked for 150-180 days. Now the number of days the state mills work has fallen steeply.

“Tamil Nadu used to account for 10-12 per cent of sugar production of the country for years; today the state accounts for less than 3 per cent,” said N Ramanathan, Managing Director, Ponni Sugars (Erode) Ltd. Ramanathan pointed to the state suffering from several disabilities like, high prices of land; dependence on rains and water deficiency in years of poor monsoons; continuing high rate of urbanisation; high cost of labour-against around Rs 200-250 per tonne spent on harvesting sugarcane in other states, it is as high as Rs 600-800 per tonne; land-holding too small to lend for mechanisation. Even where the cane is mechanically harvested, supplies are not as clean and as good as cane harvested manually – around 10 per cent is the additional cost incurred on handling unclean material; average recovery at less than 9 per cent, much lower than the average of 11 per cent plus in UP and Maharashtra; scramble for available sugarcane results in crushing immature cane that affects recovery; often mills run on cane harvested at 7 or 8 months against more mature varieties of 11 months.

Tamil Nadu has the reputation for getting the highest yield of 40 tonnes/acre on an average for years. So, more than productivity, improving the sucrose content is the imperative.  TN mills are working with the Sugarcane Breeding Institute on a Sweet Boom Project for developing a new variety, CO11015, with higher sucrose content.

Why such an initiative was not taken earlier?

Ramanathan said that such research required commitment of resources: “unfortunately, in a five-year period, production suffers for three years due to drought and thus R&D is the last priority. While one is busy fire-fighting, one is not inclined to look at ‘renovating’ the house,” said Ramanathan.

Half the sugar mills of Tamil Nadu remain closed for two years and the other half work with less than 50 per cent capacity.  In the past Tamil Nadu mills used to work for 240-270 days a year while most of the others worked for 150-180 days. Today the number of working days of state’s sugar mills has fallen steeply and capacity used has also dropped to 40-50 per cent.

PIONEERING WORK…

Tamil Nadu has decades of experience in raising sugarcane and in producing sugar. Parrys set up the first sugar mill at Nellikuppam in the state as early as in 1842.  The Sugarcane Breeding Institute, Coimbatore, (under ICAR)setup in 1912 and the Sugarcane Research Station of Tamil Nadu Agricultural University, set up near Tiruchi in 1957, focused on research in raising cane, improving yields and the sucrose content. These paved the way for early entrants like Thiru Arooran Sugars, Sakthi Sugars and Aruna Sugars.  N Mahalingam of Sakthi Sugars made a rich contribution to expanding capacity in Tamil Nadu and Karnataka as also in nurturing new entrepreneurs through Bannari Amman Sugars.

The government also set up a number of sugar mills in the cooperative sector. With assured demand and remunerative prices, there was a race for obtaining sugar mill licences. Capacity expanded substantially over the years by private entrepreneurs even expanding production in neighbouring states. At the invitation of Biju Patnaik, Chief Minister, Odisha, in the early 1990s, three Tamil Nadu sugar companies set up mills in that state (Unfortunately, two of these moved out due to unviable operations and Sakthi Sugars is still battling hard).

For quite some years in the licence-permit-quota raj, a sugar mill licence was a well sought-after privilege. MGR as Chief Minister gifted sugar mills as a favour to his friends, Industrialist G Varadaraj and NRI P G Periasamy. The pioneer S Viswanathan (SV) of Seshasayee Papers  persuaded MGR to set up Tamil Nadu Newsprint & Papers Ltd (TNPL) to produce newsprint and paper from bagasse burnt as fuel by the sugar mills. SV set up Ponni Sugars as an adjunct to Seshasayee Paper and Boards. I remember the words of SV: “in a sugar mill bagasse is the main product and sugar a by-product!”

Half the private mills closed

Sadly, this story of glorious evolution is turning out to be nostalgic. TN has 43 sugar mills, 25 private and 18 co-operatives. Co-operative mills suffer an average loss of Rs 100 crore- Rs 150 crore in a year due to higher wages and other costs and such losses continue. Of the 25 private mills, 12 are closed. The largest producer, EID Parry, has closed two of its mills in TN. Sakthi Sugars has closed two of three mills in TN. All the four units of Thiru Arooran Sugars remain closed. And the units of Dharani Sugars are working to low capacity. These leave only Bannari Amman, EID Parry, Ponni, Rajshree, Kothari and Sakthi. With high debt burden, there is no incentive to invest in new capacity.

The 2003 Electricity Act encouraged production of non-conventional energy. Sugar mills of Tamil Nadu quickly opted to set up co-generation power units based on bagasse. The tariffs were remunerative and capacity of  co-generation power grew to the third position after wind and solar power. With the cost of wind and solar power dropping steeply, co-generation lost much of its attraction. The use of bagasse for paper production, done so well in TN, could be emulated by other sugar-producing states.

N Ramanathan Managing Director, Ponni Sugars,  pointed to sugar mills offering rural employment to thousands and have been a wealth creator for a large number of farmers. Leaders of Tamil Nadu also innovated co-generation and paper production to make profits. The government should look at rehabilitating the industry through viable schemes, said Ramanathan.                                                                                   -SV

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