The sugar industry has asked the government for allocation of ₹37,996 crore, under various existing schemes and for the 5-year period between 2024-25 and 2028-29, to increase the per-hectare yield of sugarcane and thereby avoid competition between sugar and ethanol.

In a letter written to the food secretary dated May 14, two sugar industry bodies—Indian Sugar Mills Association and National Federation of Cooperative Sugar Factories—have referred to five existing schemes of the government, (such as the ‘per drop more crop’ scheme), and has asked for financial allocation under each.

In a conversation with businessline today, Deepak Ballani, Director General, ISMA, underscored the importance of raising cane yields to boost production, so that there is no competition for cane between sugar and ethanol.

The letter states the industry’s case thus, “Our country requires around 29 million tons of sugar every year for domestic consumption which is increasing and 1.5 – 2 per cent per year. As per the estimates made by Niti Aayog, to achieve 20 per cent blending targets of ethanol under the prestigious Ethanol Blending Program (EBP), there is a need of 988 crore litres of ethanol for 2024-25, out of which 55 per cent has to come from sugarcane. Further sugar industry also supplies alcohol for industrial and portable purpose which is estimated to be 132 crore litres in the year 2024-25 and estimated to be growing every year.

“Towards this, the cane production needs to be enhanced from the current productivity of 76 tons per ha to 83 tons per ha in the next five years and sustain at that level. We also have to increase the cane production area from 57 lakh ha to 62 lakh ha for achieving the above with a cane production of about 5100 Lac tons by 2030.”

The industry also aims to improve sugar recovery (percentage of sugar to cane by weight) from 10.7 per cent now to 11 per cent.

India can export sugar comfortably

India is today in a position to export two million tons of sugar comfortably without affecting domestic availability or prices, Ballani said.

If you add up last year’s opening stock of 5.6 million tons and the year’s production of 32 mt, and deduct consumption of 28.7 mt, you are left with surplus stocks of about 9 mt, Ballani told businessline today. The government likes to keep stocks of 5.5 mt (to make sure enough sugar is available). That leaves about 3.4 mt surplus sugar, which India can export.

Next (sugar) year (October-September) will be a “moderate one” and India will again have surplus.

For the past two years, India has restricted exports of sugar, allocating export quotas to mills. In the last sugar season of October 2022-September 2023, the government allowed the sugar industry to export 6.4 mt, a steep fall from the 11.07 mt in the year before.

You increased cane prices….

In February, the government announced a hike in the ‘Fair and Remunerative price’ (FRP) for sugarcane—the price that sugar mills should pay farmers for the cane—to Rs 340 per quintal linked to a recovery of 10.25 per cent. For every 0.1 per cent increase (or decrease) in recovery, the farmers will get Rs 3.32 more (or less). These prices will be applicable from October 1.

For last year, the FRP was ₹315 per quintal, so the hike in FRP was 8 a “historic” 8 per cent.

….so, now increase ethanol prices

ISMA is therefore asking the government to increase the prices of ethanol derived from sugarcane.

The current prices of ethanol are ₹65.61, ₹60.73 and ₹49.41 per litre for ethanol derived respectively from juice, B-heavy molasses and C-heavy molasses. (B-heavy and C-heavy refers to molasses obtained from different stages of refining of sugarcane—they differ essentially in sucrose content.)

But the government has not hiked the prices of ethanol 2023-24 and 2024-25. The industry is asking for ₹68.13, ₹62.16 and ₹56.28 per litre for 2023-24 (when FRP for cane is ₹315 a quintal), and ₹73.14, ₹67.7 and ₹61.20 per litre for 2024-25 (FRP of ₹340 a quintal).

Only at these prices would sugar mills find ethanol production viable, Ballani said.