Sugar industry

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INTRODUCTION

Sugar industry is one of the most important agro-based industries in India and ishighly responsible for creating significant impact on rural economy in particular andcountry's economy in general. Sugar industry ranks second amongst major agro-basedindustries in India. As per the Government of India's recent liberalised policy announcedon 12th December, 1986 for licensing of additional capacity for sugar industries during 7thfive-year plan, there will be only one sugar mill in a circular area of 40 sq km. Also thenew sugar mill is allowed with an installation capacity of 2500 TCD (Tonne Sugar Cane

crushed per day) as against the earlier capacity norms of 1250 TCD. Similarly, theexisting sugar mills with sugar cane capacity of about 3500 TCD can crush sugar cane tothe tune of 5000 TCD with a condition imposed that additional requirement of sugar canebe acquired through increased productivity and not by expansion of area for growingsugar cane. Cane sugar is the name given to sucrose, a disaccharide produced from thesugarcane plant and from the sugar beet. The refined sugars from the two sources are

practically indistinguishable and command the same price in competitive markets. However, since they come from different plants, the trace constituents are different andcan be used to distinguish the two sugars. One effect of the difference is the odor in thepackage head space, from which experienced sugar workers can identify the source. In the production scheme for cane sugar, the cane cannot be stored for more thana few hours after it is cut because microbiological action immediately begins to degradethe sucrose. This means that the sugar mills must be located in the cane fields. The rawsugar produced in the mills is item of international commerce. Able to be stored foryears, it is handled as raw material - shipped at the lowest rates directly in the holds ofships or in dump trucks or railroad cars and pushed around by bulldozers. Because it isnot intended to be eaten directly, it is not handled as food. The raw sugar is shipped to thesugar refineries, which are located in population centers. There it is refined to a foodproduct, packaged, and shipped a short distance to the market. In a few places, there is arefinery near or even within a raw-sugar mill. However, the sugar still goes through rawstage. The principle by-product of cane sugar production is molasses. About 10 - 15%of the sugar in the cane ends up in molasses. Molasses is produced both in the raw-sugarmanufacture and also in refining. The blackstrap or final molasses is about 35 - 40%sucrose and slightly more than 50% total sugars. In the United States, blackstrap is usedalmost entirely for cattle feed. In some areas, it is fermented and distilled to rum or

industrial alcohol. The molasses used for human consumption is of a much higher grade, and contains much more sucrose. Sugarcane characteristics: Sugarcane contains not only sucrose but also numerous other dissolvedsubstances, as well as cellulose or woody fibre. The percentage of sugar in the canevaries from 8 to 16% and depends to a great extent on the variety of the cane, itsmaturity, condition of the soil, climate and agricultural practices followed. The constituents of ripe cane vary widely in different countries and regions but fall

generally within the following limits: Constituent Percentage range Water 69.0 - 75.0Sucrose 8.0 - 16.0

Reducing sugars 0.5 - 2.0

Organic matter other than sugar 0.5 - 1.0

Inorganic compounds 0.2 - 0.6

Nitrogenous bodies 0.5 - 1.0

Ash 0.3 - 0.8

Fibre 10.0 - 16.0

Organic matters other than sugar include proteins, organic acids, pentosan,

colouring matter and wax. Organic acids present in cane are glycolic acid, malic acid,

succinic acid and small quantity of tannic acid, butyric acid and aconitic acid.

SUGAR INDUSTRY OF INDIA

Introduction

Sugar is extracted from two raw materials beet root and sugarcane , both produce identical refined sugar. Sugar cane accounts for two-third of the raw material used for sugar production in the world and beet root one third balance of the world production. India is the second largest producer of sugar in the world with 10 to 12% production of the world.( Brazil is the first)

In India sugarcane accounts for the key raw material for production of sugar. Maharashtra and Uttar Pradesh account for majority of produce of sugar in India. Sugar industry is the 2nd largest agro-processing industry in India accounting for 1 % of India s GDP for fy2005. India's cultivation area of 4-4.5 million hectare accounts for India's 2.7% cropped area. The production of sugar has always been in deficit over the demand with production of only 17.5 million tonne over the 19 million tonne consumption for the year 2005-06 a factor leading to industry attractiveness.
Key Characteristics of Sugar industry:

  • Capital intensive
  • Government regulated
  • Seasonal fluctuation in the industry(demand increases during festive season)
  • Raw materials constitute major cost
  • No proper substitutes
Key success factors (key performance indicators)
  • Capital utilization
  • Optimum utilization of by-products for additional revenue
  • Captive power generation

Sugar is one of the oldest commodities in the world and traces its origin in 4th century AD in India and China. In those days sugar was manufactured only from sugarcane. But both countries lost their initiatives to the European, American and Oceanic countries, as the eighteenth century witnessed the development of new technology to manufacture sugar from sugar beet. However, India is presently a dominant player in the global sugar industry along with Brazil in terms of production. Given the growing sugar production and the structural changes witnessed in Indian sugar industry, India is all set continue its domination at the global level.

The report provides a comprehensive picture of the Indian sugar market. The status of Indian sugar industry has been compared with the rest of the world in terms of raw material availability, crushing period, size of the sugar mill, production cost and prices in the report. The advantages that Indian sugar mills have over others in cost terms have been emphasized too.

Indian sugar industry is highly fragmented with organized and unorganized players. The unorganized players mainly produce Gur and Khandari, the less refined forms of sugar. The government had a controlling grip over the industry, which has slowly yet steadily given way to liberalization. The report provides comprehensive analysis about the structure of Indian sugar industry by explaining the above facets. Besides the classification of sugar products and by- products like molasses, their uses too have been extensively covered.

The production sugarcane is cyclical in nature. Hence the sugar production is also cyclical as it depends on the sugarcane production in the country. The report provides extensive information on the production of sugarcane, sugar and other sweeteners in the country in the recent years along with trends and analysis. This also includes a discussion about existing capacities in the country, trends in capacity additions, imports and production of by-products of sugar (molasses and cogeneration of power).

The report features a detailed demand analysis discussing the actual demand for sugar and other sweeteners, gur and khandari and their per capita consumption in India. This includes a trend analysis in demand in various regions of the country. The role of exports in the sugar industry has also been discussed.

The report gives an exhaustive cost analysis along with the pricing practices. Dual Pricing System is adopted in the Indian sugar industry, which includes sugar price in Public distribution system and the free sale sugar price. An analysis has been provided on the relationship between Indian and international sugar prices.

As the industry is a fragmented one, even leading players do not control more than 4 percent market in India. However, the situation is changing and players offlate are striving to increase their market share either by acquiring smaller mills or by going for green field capacity additions. Another notable trend is the shift from Gur and Khandsari to sugar in the rural areas. This should further increase the per capita consumption of sugar in India (currently around 15.6 kg). Besides the Indian urban market is slowly moving towards branded sugar. The potential in this segment seems to be very high. These trends along with the other trends like increase in the production of by-products have been captured in detail.

The market shares of the leading players and financials of following players are given in the report.

Balrampur chini mills ltd,

Bajaj Hindustan Ltd,

Andhra sugars ltd,

Thiru Arooran Sugars Ltd and

Dhampur sugar ltd

The major revenue drivers like change in the government's policies and increasing per capita consumption have been comprehensively pictured in the report. The reports ends with outlook for the sugar industry both at the Indian and

POLITICAL IMPACT ON SUGAR INDUSTRY

Sugar row accentuates India's political fragility

Sugar mills in Uttar Pradesh are yet to begin crushing for this season, which typically begins in November, due to non-availability of raw materials. Reports suggest that sugar mill owners have agreed to pay Rs 180 per quintal for sugarcane, which is Rs 50 higher than the fair and renumerative price fixed at Rs 129.84 per quintal. Farmers are demanding Rs 280 per quintal and have stopped supplies in anticipation of a higher price.

Meanwhile, Parliament was adjourned on the first day of its winter session due to protests by opposition parties against the Centre's sugarcane price move that discourages states from fixing higher prices. Thousands of farmers protested inDelhiagainst the low, state-controlled sugarcane price. The protests highlights the rural discontent over the government's sugar ordinance. Raw-sugar prices have almost doubled this year, with future contracts recording a 28-year high in September.

Sugar stocks tumbled on news of a delay in the crushing season and protest by farmers outside Parliament. Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar, Dharani Sugars, Dwarikesh Sugar, Shree Renuka, and Triveni Engineering fell 5-8%. Andhra Sugar, EID Parry, KCP Sugar, Oudh Sugar Mill, Ponni Sugars (E), Simbhaoli Sugar, Upper Ganges Sugar, and Uttam Sugar were down 2-4%.

Ambareesh Baligaof Karvy Stock Broking says the risk-reward ratio is not in favour of sugar stocks. "If you assume that the sugar prices will move up 10-15% from here, Balrampur Chini or Bajaj Hindusthan could possibly move another 10-15% more from here. But if you see the sugar prices coming down 20% over the next 4-5 months, these stocks will crash by more than 30-40% because the good news is already there in stock prices. Sugar prices move in cycles and this is clearly a cyclical industry. We have seen a good part of that over the last 6-8 months. Going ahead, whatever adverse news comes, it will actually batter these stocks."

The routine reopening of the parliament has suddenly emerged as an awkward test for the Congress-led government's ability to push reforms such as price deregulation in the face of opposition from its rural base.

Tens of thousands of farmers from Uttar Pradesh protesting against low state sugarcane prices forced the postponement of the winter session of parliament on Thursday in a major political headache for the government, re-elected in May.

Now, a once-divided opposition seemingly unable to recover from election loss have vowed to disrupt parliament until the government reverses a policy aimed at bringing in more market forces to the sugar industry, one of India's biggest cash crops.

On Friday, the opposition forced an adjournment for a second day, with lawmakers running into the house shouting slogans.

The massive street protest that brought much of central Delhi to a standstill also reflected the fragility of political stability in India, with its myriad caste, class and ethnic issues always simmering among its 1.2 billion people.

"Such a display of opposition unity,has rarely been seen outside parliament," The Economic Times commented on Friday. "The UPA government has only itself to blame for giving an issue to the opposition on a platter."

The rulingUnited Progressive Alliancecoalition has given states greater autonomy in fixing sugarcane prices to help lift restrictions on the heavily regulated sugar sector and stop sugar mills bearing the fiscal brunt of subsidised prices.

But a backlash has played into hands of the opposition, including the Hindu nationalistBharatiya Janata Party.

Bye-bye global politics

Only a week ago, domestic politics appeared to be playing second fiddle to international issues, such as global climate change negotiations and Prime Minister Manmohan's Singh's visit to Washington D.C. next week.

That mood has changed. Buoyant from the closure, protesters say the ball is now in the government's court. The government may hold an all-party meeting on Monday over the issue.

"We have now adopted the policy of wait and watch for next two to three days," Anil Singh, national secretary of the National Alliance of Farmers Associations.

"The response to Thursday's rally was satisfying. Now the government has come to its knees."

It signals the reform in India will not be plain sailing, despite a large majority for the Congress-led coalition.

Singh has promised economic reforms such as the deregulation of state-run sectors, introducing more foreign investment into areas like insurance, and boosting spending on infrastructure to allow India to compete with the likes of China.

But some reforms face endangering the Congress party's pro-poor "inclusive growth" manifesto and dashing hopes of a major revival in Uttar Pradesh, where Gandhi scionRahul Gandhihas reached out to the poor in high-profile campaigns.

Any reforms face the stark fact that two-thirds of India's population lives in villages.

One reform, bringing in foreign investment in retail, has already floundered because of opposition in rural areas.

Indeed, Gandhi was reported to have phoned Singh over worries that the sugarcane issue could derail Congress inroads into India's most populous and politically important state.

The protest does not mean all of the Congress party's reforms will be in trouble. It still has a clear majority in parliament.

For example, most analysts expect the government to raise limits of foreign investment in the insurance sector, a policy aimed at allowing India's near 40 percent savings rate to be recycled into investment and sustain higher growth rates.

"Disinvestment, etc, will go on, even though there will be protests as usual," political analyst Amulya Ganguli said.

"The opposition is delighted to have got an issue."

In the evening, the Prime Minister finally gave into political pressure saying that he would amend the sugarcane pricing ordinance in farmer interest. In a latest development it has been learnt that both the houses of the Parliament have againbeen adjourned on sugarcane price issue.

Is it the death of FRP or is it just a temporary stalling? How will sugar companies do with or without FRP next year?

While Narendra Murukumbi Managing Director atShree Renuka Sugarshails the FRP concept, Investment AdvisorSP Tulsianconsiders it to be an ill-conceived move and says that the farmers should be happy with Rs 210 per quintal.

However, Murukumbi says, “We are currently paying Rs 230 per quintal in Karnataka.” Cane prices need to be resolved bilaterally—two-third share to farmers would be fair, he adds.

Sugar deficit is a global phenomenon.“Last year there was a deficit of about nine million tonne. However, this year's deficit is probably five-six million tonne and prices have reacted accordingly,” says Kingsman Sa's Managing Director Jonathan Kingsman. Though the situation is expected to remain tight, there is a possibility that we move to a surplus from a deficit in 2010-11, according to Kingsman. He expects prices to be maintained in the next few months.

On the global footing, Kingsman says the industry knows it has to work together. So in most countries likeThailandandBrazil, there is now a revenue sharing system in place, where in roughly about two-thirds of the revenue go to the cane growth and about one-third to the millers. ”That has taken a lot of the politics and a lot of the conflict out of the situation.”

Sugar stocks were seeing huge selling pressure on news of sugar companies yet to begin crushing for the season. There were reports that sugar mill owners have agreed to pay Rs 180 per quintal for sugarcane. The farmers were demanding Rs 200 plus for the same. The crushing could not start as farmers have stopped supplies in anticipation of higher price.

Bajaj Hindusthan,Balrampur Chini,Dhampur Sugar,Dharani Sugars,Dwarikesh Sugar,Shree RenukaandTriveni Enggfell 5-8%.

Andhra Sugar, EID Parry, KCP Sugar, Oudh Sugar Mill, Ponni Sugars (E), Simbhaoli Sugar, Upper Ganges Sugar and Uttam Sugar were down 2-4%

Q: What should one expect from our neck of the woods?
A: On day one and probably through first few days this entire battle of sugarcane prices will dominate the Parliament's Winter Session. Sugarcane farmers have picketed the Parliament and the entire opposition--Mulayam Singh YadavtoAjit Singhto Bharatiya Janta Party (BJP)--is also united on this one issue. I think this will be a precursor to wider debate that is likely to take place on Parliament on rising prices per se. However, this opposition unity, which is critical, is unlikely to hold because of the Pension Bill.

The one economic legislation that, perhaps, could be at least debated in this session of the parliament, at least the government says it is determined to put it before parliament is the Pension Bill. So when that bill comes across will this unity within the Parliament stay, particularly, in the Rajya Sabha led by the Left and prevent legislation from going through? That is the space we will have to see, but at the moment, it seems that rising prices will create some element of opposition unity in the first few days of Parliament.

Q: Was it a surprise that insurance did not make it this time or was is expected that it wouldn't get taken up for discussion in the Winter Session?
A: What is happening is that the government is going step by step.Pranab Mukherjee's strategy is to try and get legislation through in an incremental manner. The fact is that the Insurance Bill is still before a Standing Committee and there is still discussion going on. So rather than bring it in the Winter Session, when it seems unlikely that it will go through, it will probably come up in the next session--the budget session--in February. However, it seems at the moment that governments' focus as far as economic legislation is primarily on the Pension Bill, can it get that bill through? I think that will be a test of the governments' attempt to build some kind of consensus on critical economic reforms.

Q: There has been a fairly clearly laid out divestment policy as we step into the Winter Session, might that come up for discussion or is that a done deal and the government will go about its business?
A:Pranab Mukherjee's strategy is to do this by stealth, which means you don't necessarily have to bring any legislation when it concerns disinvestment before Parliament. There could be a debate on it; but the government is now determined to use the Cabinet route rather than the Parliament route to pass contentious economic legislations.

I expect in the next couple of months many more PSUs to be on the chopping block. The government is very clear, before the next budget in February at least three-four more PSUs will be part of the disinvestment roadmap that the Finance Minister has drawn for himself.

Q: So from our part of the world do you expect a likely dull session or exciting?

A: The good news is that politics seem to mater less and less. The fact is that you have got a government which has a remarkable victory in the general elections and then again inMaharashtra, it has led to some element of complacency and the opposition is still to get its act together. In that situation, I don't see many political contentious issuesbeing raised in the Parliament ona regular basis. It will be a relatively dull session barring the fact that you have got all the sugarcane farmers picketing the Parliament on day one and there by providingAjit Singhhis 15 seconds of glory.

Q: That is important though because there are fairly liquid well-tracked sugar stocks in the equity market. Will the government have to blink on this one?
A: They might have to because Uttar Pradesh is the one state which is being looked at very seriously by the government in terms of the congress's future prospect there. Already we are told today there could be an Rs 7,000 crore package for Bundelkhand in the Cabinet meeting later today.

The sugarcane farmers' issue is one which even Congressmen are saying that farmers need to be provided higher price for sugarcane and then this ordinance which this government is planning to bring is not acceptable.Sharad Pawarhimself leads a powerful sugar lobby inMaharashtraand he will have to a do a balancing act between the demands that the sugarcane farmers are placing on him. So you will perhaps see the government bending on the issue of sugarcane pricing.

Thousands of farmers protesting low state-controlled sugarcane prices forced the postponement of the first day of the parliamentary winter session on Thursday, highlighting rural discontent over government policy.

Some 5,000 farmers from Uttar Pradesh, India's biggest cane producing state, marched to the opening of the parliament to demand higher state-set prices for sugarcane.

Parts of the capital was disrupted by the protests, that were backed by opposition parties.

The Congress-led coalition won re-election with a stronger mandate in May, raising hopes of quick reforms, but it has moved slowly and is still answerable to a reform-shy rural base. It faces political opposition to rapid change and deregulation as protests on Thursday highlighted.

The government has given the states greater autonomy in fixing sugarcane prices, one of India's biggest cash crops, in order to lift restrictions on a heavily-regulated sugar sector.

But many farmers are unhappy with those state-set prices, saying they benefit sugar firms.

The government has set a series of reforms ranging from the financial sector to law and order and gender equality as priorities for the winter parliament session.

Investors are following whether Prime MinisterManmohan Singhwill follow up on his pledge to push ahead with difficult financial reforms, particularly in the insurance and pension sectors.

The state government has fixed the price the mills must pay to farmers at Rs 165-170 (USD 3.55-USD 3.66) per 100 kg, and farmers have been seeking a higher price that corresponds more to the rise in retail prices.

"We demand at least Rs 215 as the cane price," Anil Singh, national secretary of the National Alliance of Farmers' Associations, told Reuters.

Sugar output in Uttar Pradesh is likely to fall below estimates as the weakest monsoon in more than three decades has hit sucrose content in cane.

As Pakistanis face an acute shortage of sugar, some families have found an easily available alternative to sweeten their tea: instead of a spoonful of sugar, they dissolve sweets in their tea.

Shaikh Kashif, an embroiderer for a boutique in Karachi, said his favourite was aCadburyEclair.

"We can't live without tea so we had to do something," said Kashif, 27, from his small workshop in an upmarket city neighbourhood.

"It just costs a rupee (Pakistan rupee) per candy and is easier to get these days than sugar," he said.

Pakistan is facing a shortage of more than 1 million tonnes of sugar largely because of a poor crop of sugarcane.

Supplies have been particularly scarce since last month when surging prices led to a Supreme Court order to millers to sell sugar at Rs 40/kg (48 U.S. cents), compared with the then-market price of about Rs 46/kg.

Government attempts to implement the court decision have led to confusion, sparking even higher market prices. Authorities are trying to get cheap supplies out to shoppers but sugar has almost disappeared at main retail markets in Karachi.

Where it is available, it sells for as much as Rs 70 a kg.

That's not a problem for Kashif who said the sweets he put in his tea gave it a chocolaty taste.

"Some in my family didn't like that so they're using a local candy which melts easily when you put it in a hot cup of tea," he said. "We had to think of something to replace sugar and it's worked for us."

SOCIAL IMPACT ON SUGAR INDUSTRY

Sugar Industry in India

Indian sugar industry is the 2nd largest agro-industry with approximately 50 million sugarcane farmers and a large number of agricultural laborers (7.5% of the rural population) involved in sugarcane cultivation and ancillary activities.

Though consumption of sugar in India has been growing at a steady rate of 3%, and is currently at 23.1 million tones, per capita consumption at 18 Kg (lower than world average of 22 Kg) indicates potential upside from a demand standpoint.

Raw Material (Sugarcane)

n India, sugarcane is the key raw material, planted once a year during January to March. It is the major cost driver for the production of sugar. It being an agricultural crop is subject to the unpredictable vagaries of nature, yielding either a bumper crop or a massive shortfall in its cultivation from year to year

Industry Structure

About 50% of the sugar capacity is controlled by Cooperatives & Public sector mills. There are 566 sugar mills installed in the country, of which about 100 (mostly cooperatives) are not in operation. Almost half of the operational sugar cooperatives are in Maharashtra alone.

Though most private players have been moving towards larger and integrated complexes, most cooperatives are still much smaller in capacity, and are standalone sugar mills. This has resulted in their becoming uncompetitive as compared to private mills.

Government Policies

Sugar has historically been classified as an essential commodity and has been regulated across the value chain. The heavy regulations in the sector artificially impact the demand-supply forces resulting in market imbalance

Sensing this problem, since 1993 the regulations have been progressively eased. The key regulatory milestones include de-licensing of the industry in 1998 and the removal of control on storage and distribution in 2002.

Value drivers

Economical impact

UP sugar mills agree to pay Rs 205-210 a quintal for cane
Sugar mills in Uttar Pradesh have offered to pay Rs 205-210 a quintal of cane for the ongoing 2009-10 crushing season. This is against the state advised price (SAP) of Rs 165-170 a quintal. The UP Sugar Mills Association (UPSMA) had on November 14 agreed to pay Rs 180 a quintal for regular cane and Rs 185 for early varieties. When this failed to enthuse growers, the mills announced an additional Rs 10 as incentive, taking the effective cane price to Rs 190-195.

On Sunday last (November 29), they offered a further increase of Rs 10, translating into a price of Rs 200-205 a quintal. But these sweet offers failed to placate the growers, particularly in the western UP belt and the stir by farmers of the region culminated in a hugely attended sit-in at Shamli in Muzaffarnagar.

On Tuesday (December 1), all the mills in western UP have accepted a new rate of Rs 205-210 per quintal. Following this offer, the farmers have also called off their stir and the industry hopes crushing will resume in full swing. The state has a total of 132 running sugar mills, out of which 90 are private mills.

Last year mills in UP paid a SAP of Rs 140-145 a quintal. However, with more than 100 per cent jump in sugar prices due to a 43% drop in production in the year ended September 2009, farmers have been pressing for a higher price of Rs 280 per quintal.

Sugar output in India, the world's second largest producer, may fall short of the earlier estimate of 16 million tonnes in 2009-10 season. Sugar prices have touched Rs 40 a kg in the cities and with the hike in sugarcane prices, retail prices of sugar is bound to go up further.

UP sugar mills enter price war to procure cane

Low availability of cane and higher price realisation force mills to pay more.

Low availability of sugarcane and high price realisation have forced a majority of sugar mills in Uttar Pradesh (UP) to enter into a price war quite early in the 2009-10 season (October-September). The mills are paying Rs 10 a quintal higher than the price of Rs 190-195 a quintal agreed unanimously by the private millers last week. UP is the second-largest sugar producing state after Maharashtra and top producers such as Bajaj Hindusthan and Balrampur Chini have all their operations in the state.

A majority of sugar mills in western UP districts such as Meerut, Muzaffarnagar, Saharanpur are now paying a price of Rs 200-205 a quintal for sugarcane. The state government had announced a state advised price (SAP) of Rs 165-170 a quintal. However, farmers association in the state led by the likes of Mahendra Singh Tikait and V M Singh have been protesting and seeking a price of Rs 280 a quintal since sugar realisation has moved to a record of Rs 33-34 a kg.

Last year mills had paid a SAP of Rs 140-145 a quintal. However, with more than a 100 per cent jump in sugar prices due to a 43 per cent drop in the production in the year ending September 2009, farmers have been pressing for higher sugarcane prices.

In order to appease farmers, the UP Sugar Mills Association (UPSMA), agreed to pay Rs 25 a quintal as an incentive above the SAP. This was the first time that the industry formally announced a bonus. However, a number of mills have failed to get adequate sugarcane even after this move.

Consequently, some are still offering a higher price of Rs 200-205 a quintal. Given the current realisation of Rs 3,300-3,400 a quintal in sugar, mills will make decent profits even after paying Rs 200-205 for every quintal of sugarcane.

"Any price beyond Rs 200-205 a quintal will be suicidal for the mills. Sugar prices are not going to move up considerably from the current level", said a miller.

Even now, farmers associations are agitating in these districts and seeking a price of Rs 220 a quintal, said Arun Khandelwal, Khandelwal, president, Federation of Gur Traders, Muzaffarnagar. The UPSMA today called a meeting of its member mills to discuss the situation. However, the three-hour long meeting ended without any decision. The association members are meeting again tomorrow.

Sugar industry wants market-determined prices

Mumbai: The sugar industry has asked the government to let the market govern the prices of the sweetener, by partially decontrolling the industry and re-introducing sugar futures trading.

“On account of the potential supply-demand mismatch, the government should let the prices be governed by market forces through partial decontrol of the industry and re-introducing sugar futures trading,” Murugappa group vice-chairman and director (strategy) A Vellayan said.

With hopes of economic recovery strong because of a stable government, industry captains are looking forward to a favourable budget this year.

International crude prices have again reached $70 per barrel, indicating a greater probability of sugar manufacturers of Brazil switching to ethanol production, thus creating a shortage in the international market.

It is important to ensure that the supply-side restriction does not lead to domestic shortage, Vellayan said.

The government should provide subsidized natural gas to sugar refineries and introduce fiscal benefits for new technology investments and working capital requirements. This will guarantee a reasonable availability of stocks at all times for the domestic market, he said.

Among other key expectations of the industry is that the government should do away with the release order mechanism, which may create supply shortages and push up prices, instead of importing high-cost white sugar, he said.

Vellayan also asked for improving efficiency in the sugar industry.

The government should introduce a package for reviving sick units through disinvestment. Power cogeneration is another issue in which the government needs to give a level-playing field by allowing market-determined prices, he said.

The world sugar industry is concerned over the delay in the Indian monsoon and Indian output trailing estimates in the next sugar season, which will lead to price rise.

India, which has a strong appetite for sugar after a dismal domestic harvest, has helped drive up raw sugar prices sharply by 50-55% compared to June 2008. India may import as much as 3 million tonnes of sugar in the year ending 30 September, Indian Sugar Mills Association (ISMA) director-general S L Jain had said earlier.

Vellayan pointed out that the growth of the agri-industry has been constant over many years at 2.5% and the stock of foodgrain against use ratio is becoming thinner, clearly indicating depletion in buffer stocks.

To infuse dynamism into the sector, the government should introduce a comprehensive package, which covers irrigation, farm input usage, viability of industrial units involved in farm input supply and other services, Vellayan said.

Basic listings

Bannari Amman Group
Bannari Amman Group is one of the largest Industrial Conglomerates in South India with wide spectrum of manufacturing, trading, distribution and financing activities. Manufacturing and trading include sugar, alcohol, liquor, granite, cotton yarn. Distribution of automobiles and related accessories of renowned brands with financing activities.

Dhampur Specialty Sugars Ltd
Involved in the manufacturing, consulting, market research and exports of speciality sugars since 1932.

Dwarikesh Sugars

Led by atea of dynamic professionals the company strives to establish itself as a market leader in the sugar industry. Dwarikesh's constant endeavour to go that 'extra mile' to contribute in making the environment eco-friendly (planting 10,000 environment friendly trees not only in the premises but also in the surrounding areas) has won it many laurels.

M.B.Sugars
M.B. Sugars and Pharmaceuticals Ltd. is a leading manufacturer of specialty sugars in INDIA. With an aim to give only the highest quality products, today M.B. Sugars and Pharmaceuticals Ltd. are in a proud position where we can produce and supply anything in sugar.

Rana Sugars

Rana Sugars Ltd was founded in 1992 by collaborating with Punjab Agro Corporation. RSL has setup a Demonstration Co-generation Project to produce extra power from the Bagasse (bye-product) and export it to PSEB

Pollution control technologies for sugar industry

1. The Objectives and Scope of the Study

The objectives and scope of the study are as follows:

  1. The relationship and the importance of the selected subset of technology to be broad one to which it belongs;
  2. The current status of the technology in the world and in the country;
  3. Assessment of the technology and options available to the India;
  4. The economic aspects of technologies along with their feasibilities which leads to the preferred option(s);
  5. Impact of the preferred option by itself, its linkages to the broad area of technology and spin offs, and
  6. Recommendations:

- For implementations of preferred technology option(s) identify critical inputs such as raw material, capital goods and human resources required and their availability, investments required to commercialize, and benefits/returns expected. Maximum possible quantification is required.

- For R&D / Technology development identify the requirement of inputs and expected benefits.

  1. Action Plan for implementation of recommendations alongwith identification of:
    1. List of available technologies for Indian industry and
    2. The agencies/groups/individuals for implementation.
  2. Expected impact of recommendations, if implemented. The study to build upon the earlier studies of TIFAC and other organizations, with a focus of details for action.

2. Methodology

The report is based on the findings of mail survey and field visits and the information collected through desk research. Mail survey and field visits were conducted to elicit the views of different categories of respondents such as sugar mills, equipment / know-how suppliers, R & D organizations, experts and manufacturers' associations.

3. The Importance of the Indian Sugar Industry

India is the largest sugar producing country in the world. The sugar industry plays an important role in India's economy. It is the second largest industry in the country, next to textiles and provides direct employment to more than 3.6 lakh persons. The cultivation and transportation of sugarcane to the sugar mills provides a source of income to large number of farmers, labourers, technicians, transport operators. It also supports a number of engineering industries located both in rural and urban areas.

Molasses, press mud and bagasse are the three important by-products of the sugar industry. For every 100 lakh tonne of sugar produced, the sugar industry produces 45 lakh tonne of molasses, 32.1 lakh tonne of press mud and 333 lakh tonne of bagasse. These by-products are potential pollutants unless disposed off.

4. Waste Waters of Sugar Manufacturing Process

Indian Sugar mills generate 0.16-0.76 m3 of waste water for every tonne of cane crushed by them. During 1993-94, India produced 98 lakh tonne of sugar. At this production level, on an average, the Indian sugar mills generated about 4,50,800 lakh litre of waste water. The combined sugar mill waste water has a BOD of 1,000 to 1, 500 mg/l. the pollution standards stipulate that BOD of waste water should be less than 30 mg/l for disposal into inland surface waters and less than 100 mg/l for disposal on land. BOD can be 500 mg/l, in case land application of treated waste water is envisaged as a secondary treatment system for further removal of BOD.

The sugar mill waste water, as it leaves the premises, has a relatively clear appearance, however, after stagnating for sometime, the waste water turns black and starts emitting foul odour. If discharged in water courses, its high BOD depletes dissolved oxygen in water and makes the environment unfit for fish and other aquatic life. Oil and grease in waste water hasten such mortalities. If untreated waste water is discharged on land, decaying organic solid and oil and grease present in the waste water clog the soil pores. The waste waters from some of the sections contain considerable amount of suspended solids which deposit and cause blockage in drains and ditches.

5. Air Pollutants

Most of the sugar mills use bagasse as a fuel in boilers. The burning of bagasse in boilers produces particulate matter, oxides of nitrogen, carbon, sulphur and water vapour. Except for particulate matter, other emissions of bagasse fired boilers are within the limits prescribed by the pollution control authorities. The particulate matter, usually referred to as fly ahs, consists of ash, unburnt bagasse and carbon particles. Fly ash is very light and it contains a large percentage of fines. If air pollution control equipment are not installed, fly ash will fully escape into the atmosphere through the chimney. The particulate matter coming out of the chimney will travel distances depending on particle size and atmospheric conditions. There is a reduced visibility in the areas surrounding the sugar mill. The heavier particles settle on vegetation and damage them. There are reports of dizziness and physiological effects like irritation in the eye, nose, throat and lungs, in the surrounding areas.

As per the general emission standards, particulate matter is required to be within 150 mg/Nm3. in case of horse shoe/pulsating grate and spreader stroker bagasse fired boilers, the particulate matter emission is required to be within 500 mg/Nm3 and 800 mg/Nm3 respectively.

6. World Trends

in 1992-93, the world production of sugar was 1,124.39 lakh tonne. India is the largest producer of sugar followed by Brazil. However, at 13.4 kg, the Indian per capita consumption of sugar is low when compared to that of developed countries. Indi'as share is world wide exports of sugar is negligible.

The choice of a pollution control method in a region or a country depends on a number of factors such as characteristics of the pollutant, pollution norms of the country, equipment and operating costs etc. land application without treatment and land application after biological treatment are the common methods of treating sugar mill waste water in different parts of the world. Bagasse is used as fuel in furnaces. The furnaces are either of stepped grate or spreader stoker design Mechanical Separators and multi-cyclones are used as air pollution control equipment.

7. Observations and Recommendations

7.1 During the process of sugar manufacture, condensates are available from juice heaters, multiple effect evaporates, vacuum pans etc. condensates, if contaminated with juice, have to be disposed off as waste water. It is therefore, desirable to take preventive steps to avoid contamination of condensates. The uncontaminated condensates can be recycled. A large quantity of eater is required for cooling of bearings, glands of machinery, air compressors, sulphur burner, C massecuites etc. it is estimated that a 2,500 tcd sugar mill requires 129.50 m3 of cooling water per hour or 1.24 m3 of cooling water per tonne of can crushed. It is suggested that cooling water be recycled instead of being released as waste water.

Recycling of condensates and cooling water helps in minimizing the amount of water joining the waste water stream. This also helps in conservation of water, which has become a scare resource for several sugar mills. Besides, sugar mills have to take steps to minimize the amount of pollutants joining the waste water stream.

7.2 The sugar mill waste water contains large quantities of bio-degradable organic matter and therefore biological treatment processes are most commonly used for its treatment. In general, anaerobic biological processes (oxidation ponds and biomethanation) have several advantages over aerobic processes (aerated lagoons, activated sludge process). Anaerobic processes decompose the organic compounds in an atmosphere free of oxygen and consequently require significantly less energy as compared to aerobic processes. As compared to aerobic processes, anaerobic processes are easier to control and operate, produce a lower quantity of sludge and their annualized costs are lower. In view of the above, it is preferable to treat sugar mill waste waters by anaerobic processes rather than aerobic processes. Treated waste water with a BOD level of about 100 mg/l can be used for irrigation of sugar cane fields.

7.3 Multi-cyclones, wet collectors, bag filters and electrostatic precipitators can reduce particulate matter in boiler emissions by 90% or more. These equipments can reduce he concentration of particulate matter to 450 mg/Nm3 or less, in case particulate matter concentration in boiler emissions is in the range of 4,500 mg/Nm3. Electrostatic precipitators exhibit a very high collection efficiency. However, given their high capital cost, the present emission standards do not warrant installation of electrostatic precipitations for the control of particulate matter from bagasse boilers. A sugar mill may choose one of the three remaining air pollution control equipment, viz. multi-cyclones, wet collectors and bag filters, depending upon the actual emission standards stipulated by the State Pollution Control Board.

Comparison of Air Pollution Control Equipment for Bagasse Boiler Emissions

Evaluation criteria

MC

WC

BF

ESP

Collection efficiency

90%

90-95%

99%

99%

Capital cost (Rs. Lakh)
(2,500 tcd mill)

35

50

100

300

Land required (m2)
(2,500 tcd mill)

250

300

250

500

Operating cost (Ranking)@

3

2

1

2

Indigenous availability

Yes

Yes

Yes

Yes

@

1 is the highest ranking followed by 2, 3, and 4.

Legend:

MC

Multi-cyclones

WC

Wet Collectors

BF

Bag Filters

ESP

Electrostatic Precipitators


7.4 A number of sugar mills have already installed waste water treatment plants and air pollution control equipment. A committee of experts should be constituted for identifying at least one waste water treatment plant and one installation of air pollution control equipment, in each geographic zone in the country as demonstration plants. The sugar mill owning the demonstration plant should be required to extend full co-operation to the government designated agencies to evaluate the pollution control technology, carry out mutually agreed experiments and improvements, share information regarding plant design, maintain and provide information regarding different operating parameters and operating economics and permit visitors to see the plant in action . in returns, the government should compensate the sugar mill by fully reimbursing the operating cost of the demonstration pant.

7.5 Bagasse, molasses, press mud, waste water and fly ash are produced during the manufacture of sugar. As bagasse, molasses and press mud are gainfully utilized, they do not cause much environmental pollution though they are potential pollutants. It is suggested tat a detailed study be conducted to identify technologies for gainful utilization of sugar mill waste water and fly ah. This will encourage the sugar industry to install pollution control equipment at the earliest.

7.6 There is no adverse technological gap between India and the rest of the world in the area of pollution control technologies for sugar mills. This observation has been corroborated by almost all the respondents to the survey viz. sugar mills, pollution control equipment manufacturers and experts. It is also noted that several Indian organizations are already having technical collaboration agreements or representation/license arrangements with leading foreign companies specializing in the field of pollution control technologies.

7.7 Sugar mill waste water has low BOD. The distillery waste water is low I pH, highly coloured and very high in BOD. The paper mill waste water is alkaline in nature and its intensity of colour is less tan that of distillery waste water. Mixing of waste waters of sugar mill, distillery, paper mill and sugar mill in proper proportions is likely to reduce the installation and operating cost of waste water plants. The above arrangement is possible in an integrated sugar complex consisting of sugar mill, molasses based distillery, and a bagasse based paper mill. It is suggested that detailed studies be conducted to arrive at the cost and the benefits of installing a combined waste water plant for treating the different waste waters of a sugar complex.

7.8 Most of the sugar mills do not have the financial strength to invest on in-plant pollution abatement measures or pollution control equipment. In view of the above, the government should do away with all types of taxes and excise duties on pollution control equipments so as to reduce their capital cost. besides, the present scheme of allowing 100% depreciation on pollution control equipment cannot act as a source of funding for loss making mills and as such a different set of incentives should be provided. This could include lowering of promoter's margins, longer repayment period, lower interest rate etc.

7.9 A number of organizations claim to have developed pollution control technologies which meet the norms prescribed by the pollution control boards. The sugar mills are hesitant to invest large sums of money on these equipments without knowing the true efficiency or the cost aspects of these equipments. Short-listing and approval of pollution control equipments and technologies by pollution control boards will enable the sugar industry to select the equipment/technology without any hesitation and within a short span to time. Newer but unproven technologies should be identified by a committee of experts. In order to encourage sugar mills and venture capitalists to participate in the scheme, the government should subsidize a part of the project cost. Funding of the project through venture capital will ensure that sugar mills are not put to financial loss in case the project fails to meet its objectives. Besides, in case of a project failure, the pollution control board should give sufficient time to the concerned sugar mill for meeting the pollution standards.

7.10 It is suggested that the pollution control activities of a sugar mill be entrusted to qualified environmental engineer. Besides supervising the activities of the pollution control plants, he can also assist the sugar mill in developing pollution abatement measures. There is a need for training operators of pollution control equipment in basics of environmental science so that they can understand the importance of various process parameters and take basic decisions, if required. It is therefore suggested that specialized training institutes be set up in every state for conducting short duration courses for operators for pollution control equipment. Besides, these institutes can train chemists to scientifically analyze the characteristics of pollutants before and after the treatment.

Report

Executive Summary In an era where there is a need for inclusive growth, the sugar industry is amongst the few industries that have successfully contributed to the rural economy. It has done so by commercially utilizing the rural resources to meet the large domestic demand for sugar and by generating surplus energy to meet the increasing energy needs of India. In addition to this, the industry has become the mainstay of the alcohol industry. The sector supports over 50 million farmers and their families, and delivers value addition at the farm side1 . In general, sugarcane price accounts for approximately 70 percent of the ex-mill sugar price2. The sector also has a significant standing in the global sugar space. The Indian domestic sugar market is one of the largest markets in the world, in volume terms. India is also the second largest sugar producing geography. India remains a key growth driver for world sugar, growing above the Asian and world consumption growth average. Globally, in most of the key geographies like Brazil and Thailand, regulations have a significant influence on the sugar sector. Perishable nature of cane, small farm landholdings and the need to influence domestic prices; all have been the drivers for regulations. In India, too, sugar is highly regulated. Since 1993, the regulatory environment has considerably eased, but sugar still continues to be an essential commodity under the Essential Commodity Act. There are regulations across the entire value chain land demarcation, sugarcane price, sugarcane procurement, sugar production and sale of sugar by mills in domestic and international markets. However, fundamental changes in the consumer profile and the demonstrated ability of the sector to continuously ensure availability of sugar for domestic consumption has diluted the need for sugar to be considered as an essential commodity. According to a recently conducted nation wide survey, nearly 75 percent of the total non-levy sugar is...

Sugar Assessment

Sugar & Agriculture

1.1 Executive Summary:

Global growth in the sugar industry on average increases by about 2% per annum and is expected to reach almost 160 million tons by the close of the year.In 2007/08, approximately 69% of world sugar production is consumed in the country of origin. Preferential prices in the EU and US remain at a significant premium to the world sugar average. The ongoing strength of the Euro continues to benefit prices in US dollar terms and a uniform EU price is now paid for both ACP (African, Caribbean and Pacific) and EBA (Everything But Arms) sugar protocol exports.

Domestic sugar prices in the South African Customs Union remain substantially below those of some developed nations.The most recent independent survey of international sugar production costs, covering in excess of 100 sugar producing countries, indicated that of the six countries in which Illovo (ABF's recently acquired subsidiary) operates, three are in the top fifteen lowest-cost cane sugar producers in the world.

1.2 Market Trend Analysis

Sugar

ABF is the world's second largest sugar producer, after Südzucker from Germany.

Europe: The company is the sole processor of the UK sugar beet crop, producing over 1 million tonnes of sugar per year. Sugar became part of the group with the acquisition of British Sugar in 1991 and is supplied to Silver Spoon (within the Grocery Division) for the retail market and to food and drink manufacturers in the UK and Europe. ABF also has a strong presence in Poland where it produces over 100,000 tons of sugar annually.

China: National production of sugar in China increased from 12 million tonnes in 2006/7to 14.9 million tonnes in 2007/8 and despite a strong growth in demand and government measures to reduce volume, sugar prices fell sharply in the second half. ABF has recently extended its reach in China through a number of joint ventures and its total annual sugar production in China is currently 650,000...

Introduction

The project of Intra Industry trade of India from 1990-2000 is an attempt to understand the India's trade with world and changes taking place in the nature of trade in various commodities. To achieve this process of understanding we followed a methodology, which is being described subsequently. Working on the lines of that methodology analysis has been done of the extracted data relevant to our objective. Thereafter analysis is done by evaluating Grubel Lloyd Index, commodities in Vertical and horizontal Category and evaluating their respective indices.
This is being followed by choosing 5 industries based on the factors viz. Technology, Labour, Role of Government and Role of Domestic Consumers which cover the broadest of the economic framework and can be utilized for further prediction. We have chosen following sectors and analysis done in these try to answer associated questions qualititaively:

  • Diamond: How the Labour abundance and skill shaped the magnitude and nature of Trade in diamond Sector?
  • Sugar: How much can Government affect the direction and strength of trade and role of technological upgradation & skillset shapes the trade parameters?
  • Preserved Food: How changing taste and preferences of consumer affects the trade?
  • Man Made Staple and Fibre: What is the affect of Labour laws and unskilled labour on trade and How the latent advantages remain hidden if Policy makers are late?
  • Carbon: Once again a classic case of going from Horizontal to Vertical in an undesirable way. Here duties' structure come into picture.

Effects Of The 1884 Beet Sugar Crisis On British Guiana And Barbados

"Beet sugar is and has been the greatest single challenge to the viability of cane sugar."
M. Shahabuddeen
CRISIS has apparently cohabited with the British West Indian sugar industry for much of that industry's existence. Crisis, if not ruin, has been forecast or asserted since the early 18th century - during the perennial Anglo-French wars, during and after the war for American Independence, during the Napoleonic wars, when the slave trade was abolished, when competition from Mauritius and East India emerged, when slavery was about to be abolished, and, of course when control over the traditional market for sugar was lost. What is remarkable is that this crisis-ridden industry survived all these shocks.
In 1884, however, the British West Indian economy entered another period of depression and instability. The primary reason for this was the sharp decline in the sugar industry and this decline was due to the increased competition from sugar beet which was manufactured by France, Germany, Austria, Holland, Belgium and Russia. According to the report submitted by the 1897 West Indian Royal Commission, which was sent out to "inquire into the depressed conditions of the industry", the depression, "of the industry is due to the competition of other sugar producing countries and in special degree to the competition of beet sugar produced under a system of bounties."
In the early years of the beet sugar industry, which started from the time of Napoleon, there was no serious threat to West Indian sugar. The governments of these countries had several reasons for encouraging the manufacture of beet sugar. Apart from the fact that it helped to make these countries self-sufficient particularly in times of war when their supplies from overseas could be threatened by enemy action, production was encouraged because the increasing populations of these countries needed employment in any industry that could be established. For these reasons, the...

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