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Amid the ban on the use of sugarcane juice and B-heavy molasses for ethanol, Ravi Gupta, Vice Chairman of All India Sugar Trade Association (AISTA), has said that there is no concern about ethanol availability in the country and the government should allow 1 million tonnes (mt) of sugar for export in the current season. In an interview with businessline, Gupta, also executive director of top refiner Shree Renuka Sugars, said that the opening balance of sugar in the next season may be over 7 mt even after permitting export. Excerpts:
What is your outlook on the sugar sector moving forward?
The sugar sector has witnessed significant growth over the past decade. Sugarcane production has increased steadily, with a Compound Annual Growth Rate (CAGR) of 3.5 per cent over the last two years. Additionally, sugarcane prices have seen a CAGR increase of 5 per cent, resulting in more income for farmers. The government’s ethanol blending initiative has been instrumental in transforming surplus sugar into ethanol, with a blending rate of 12 per cent already achieved (in ESY 2022-23). This shift towards ethanol production indicates a positive trajectory for the sugar industry.
How do you view the sector progressing in the future?
Looking ahead, we should focus on sustainable growth within the sugar sector. This entails maximizing sugarcane yield on existing land while conserving resources. Emphasizing micro-irrigation, farm mechanization, and varietal improvement is crucial, especially in regions like Maharashtra and Karnataka, to mitigate production volatility. There is also a need to align the minimum selling price of sugar with sugarcane prices to ensure the holistic development of the industry.
Though sugarcane prices have increased by 5 per cent in the last year, the rise is less than 2 per cent for sugar. An ideal mechanism may be found in which both the fair and remunerative price of cane and the minimum selling price of sugar are announced together.
Despite being five months into the current ethanol year, ethanol blending remains about 12 per cent, whereas the target is 15 per cent this year. How do you propose meeting this target?
The 15 per cent was an interpolated number to achieve the main target of 20 per cent by 2025-26. Despite the current ethanol blending rate of 12 per cent, it’s essential to acknowledge the achievement, considering challenges like a weak monsoon. Government intervention, such as adjusting maize-ethanol prices, has boosted ethanol production from grains to compensate for the lesser contribution from the sugarcane sector. With next year’s anticipated surplus sugar stock, achieving the target rate seems feasible.
To achieve the 20 per cent target, we should prepare infrastructure in advance, including ethanol- dispensing petrol stations and flexi-fuel cars.
The auto industry is not that enthusiastic about flexi-fuel cars. It is like chicken-egg syndrome. What will happen to investment if there is no taker for a flexi-fuel vehicle? Ultimately, it has to be a business proposition, and why coax them if there is profit in it? Should they not automatically invest?
The concern about ethanol availability should not exist. India already produced 39 million tonnes (mt) of gross sucrose in 2021-22, which is 10 mt higher than consumption. Besides, ethanol from grain-based plants is increasing. There will be enough ethanol to feed flexi-fuel cars. This will also give customers the flexibility to opt for environment-friendly ethanol from petrol.
With IMD and Skymet predicting an over 100 per cent normal monsoon, how do you foresee the sugar outlook for next year?
Favourable monsoon forecasts and recent rains in the Marathwada region bode well for the upcoming sugarcane crop. While I refrain from speculating on next year’s sugar production, the prospect of another surplus harvest is promising. This surplus can contribute to expanding ethanol capacity.
If a surplus year is coming, should exports be allowed next season? Should an announcement be made now to facilitate advance contracts for November delivery?
We seem to be adding 3 mt of sugar to ending stocks as of September 30, 2024. Therefore, an export of a million tonnes should be permitted even in the current season. This will still leave more than comfortable opening balance of over 7 mt as of October 1, 2024. That said, the government’s priority remains prioritizing sugar for domestic consumption, followed by ethanol production and then exports.
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