statistical analysis of sugar consumption in india

A STATISTICAL ANALYSIS OF SUGAR CONSUMPTION IN INDIA

Arpit khullar- 10IB-021Ashutosh Kr Burnwal- 10DM-027

Ashutosh Mahajan -10FN-029Ashok kumar-10DM-025

Bhaumit Patel-10DM-031

Beginning of Sugar Industry in India

Sugar is made from sugarcane, which was arguably discovered thousands of years ago in New Guinea.

From there, the route was traced to India and Southeast Asia.

Sugar did exist and was used in foods since ancient times, however Honey was more popular item used for sweetening.

Somewhere around the 6th Century, It was India which began producing Crystallized sugar following the process of pressing sugarcane to extract juice and boil it to get crystals.

Sugarcane Products

6 to 37 species of Sugarcane

Products: Table Sugar(normal sugar used in food):

sucrose Molasses: viscous by-product used in making

beverages(rum) Ethanol: Used psychoactive drugs(affects brain) Bagasse: crushed sugarcane left after

extracting juice,used in electricity production and pulp and paper industry

Government of India’s roles

The Modern sugar Industry in the organized sector started in the mid-twenties

Government provided Sugar industry protection in 1932

Under it tariff was imposed on imported sugar for 14 years

As a result Output shot up 6 fold between 1932 and 1936, led to self sufficiency

It was in 1950-51, the government of India made serious industrial development plans and set the targets for production and consumption of sugar.

It projected the license and installment capacity for the sugar industry in its Five Year Plans.

Government of India’s roles (contd)..

Various forms of Government controls on pricing have been operating

A minimum price to be paid to cane growers has also been a part of government policy since 1930’s(though it hasn’t been implemented properly)

Government of India fixes Statutory Minimum Price (SMP) for sugarcane.

This statutory Minimum Price is designed through the consent of Commission for Agricultural Coast and Prices (CACP since 1965, advise the Government on price policy of major agricultural commodities) and respective state Governments.

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

Manufacturing Process followed in Sugar Industry in India

Several steps are usually followed to produce sugar. These steps can be mentioned as below:

Extracting juice by pressing sugarcane Boiling the juice to obtain crystals Creating raw sugar by spinning crystals in

extractors Taking raw sugar to a refinery for the process of

filtering and washing to discard remaining non-sugar elements and hue

Crystallizing and drying sugar Packaging the ready sugar

Sugarcane Statistics

The share of India in the total production of sugarcane in the world is 37% (second largest producer of sugar in the world with 10 to 12% production of the world).

The quality of sugarcane of our country is not so good and researchers are trying to update it, due to lack of interest and proper attention from the government side, not much success has been achieved yet.

Per hectare production of the sugarcane is also not improving due to lack of land fertility and lack of irrigation facilities.

The production of sugarcane is only 15 tones per acre in India whereas in Java it is 56 tones and inHawaii it is 52 tones

LITERATURE REVIEW

Some major articles reviewed were: Sugar stocks: sweet on decontrol hopes? India sugar industry faces mounting probl

ems Will SAP decision benefit sugar stocks? Aim to be major player in ethanol fuel

mkt: Shree Renuka Sugars. Sugar mills will no longer have to pay Sta

te advised prices for cane

http://www.moneycontrol.com/news/economy/sugar-stocks-sweetdecontrol-hopes_472181-0.html


http://in.reuters.com/article/idINIndia-30141620070604


http://www.moneycontrol.com/news/market-outlook/will-sap-decision-benefit-sugar-stocks_312136.html


http://indiaearnings.moneycontrol.com/sub_india/compnews.php?autono=250762






http://www.thehindubusinessline.com/2009/10/25/stories/2009102550940100.htm


OBJECTIVE

The objective was to study the dependence of sugar consumption on various independent variables. We used regression analysis to predict the behaviour of sugar consumption wrt to the following variables

Prices of sugar(Medium Grade) in Rs/quintal, Per capita income (in Rs.), Population of India (in lakhs) , Sugar Production (in '000 tonnes), Prices of jaggery (in Rs/quintal).

The data for the analysis is collected for the period 2001 to 2009.

HYPOTHESIS-Single Variable

Regression of Sugar Demand(Y) versus Prices of Sugar(X1): NULL HYPOTHESIS: The coefficient of X1 is zero. Hence Sugar Demand

does not depend upon Price of Sugar. ALTERNATE HYPOTHESIS: The coefficient of X1 is not zero. Hence Sugar

Demand depends upon Price of Sugar.

Regression of Sugar Demand(Y) versus Per capita income (X2): NULL HYPOTHESIS: The coefficient of X2 is zero. Hence Sugar Demand

does not depend upon Per Capita Income. ALTERNATE HYPOTHESIS: The coefficient of X2 is not zero. Hence Sugar

Demand depends upon Per Capita Income.

Regression of Sugar Demand(Y) versus Population of India (X3):: NULL HYPOTHESIS: The coefficient of X3 is zero. Hence Sugar Demand

does not depend upon Population of India. ALTERNATE HYPOTHESIS: The coefficient of X3 is not zero. Hence Sugar

Demand depends upon Population of India..

HYPOTHESIS-Single Variable, contd…

Regression of Sugar Demand(Y) versus Sugar Production (X4):: NULL HYPOTHESIS: The coefficient of X4 is zero. Hence Sugar

Demand does not depend upon Sugar Production. ALTERNATE HYPOTHESIS: The coefficient of X4 is not zero.

Hence Sugar Demand depends upon Sugar Production.

Regression of Sugar Demand(Y) versus Prices of

Jaggery (X5): NULL HYPOTHESIS: The coefficient of X5 is zero. Hence Sugar

Demand does not depend upon Price of Jaggery. ALTERNATE HYPOTHESIS: The coefficient of X5 is not zero.

Hence Sugar Demand depends upon Price of Jaggery.

HYPOTHESIS-All Variables taken

Regression of Sugar Demand(Y) versus X1, X2, X3, X4 and X5:

NULL HYPOTHESIS: The coefficient of X1,X2,X3,X4 and

X5 are zero. Hence Sugar Demand does not depend upon Price of Sugar, Per Capita Income, Population of India, Sugar Production and Price Of Jaggery.

ALTERNATE HYPOTHESIS: The coefficient of X1,X2,X3,X4 and X5 are not zero. Hence Sugar Demand depends upon Price of Sugar, Per Capita Income, Population of India, Sugar Production and Price of Jaggery.

METHODOLOGY

We apply Regression Analysis on the data with the following independent and dependent variables

Dependent Variable: Annual Sugar consumption in India over the years (in

'000 tonnes) , Y

4.2 Independent Variables:

Prices of sugar(Medium Grade) in Rs/quintal, X1 Per capita income (in Rs.), X2 Population of India (in lakhs) , X3 Sugar Production (in '000 tonnes), X4 Prices of jaggery (in Rs/quintal), X5

DATA ANALYSIS

The P-value of X1,X2,X3,X4 and X5 are very high which ultimately implies the rejection of our model.

As the coefficient of price of jaggery is negative which should be positive as sugar consumption is directly proportional to price of jaggery, it also states the rejection of the model.

By both the above explained reasons ,we can state that price of jaggery is not an independent variable and hence raising the problem of multicollinearity. Reason of this is that both jaggery and sugar are derived from sugarcane.

FINAL RESULT

Y= -26007.5 + 2.119(X1) - 0.14768(X2) +3.8312(X3) + 0.1318(X4)

INTERPETATIONS

The P-value of Per capita income i.e. 0.4474 is high but as its coefficient i.e. -0.1478 is low, the result does not effect this regression model,

Other parameters’ P-values are within limits. Which explains that the annual sugar consumption is dependent upon mainly Price of sugar, Indian population and the production in that year.

Adjusted R square value is 0.94772, which indicates that 95% datas are explained on the basis of regression model. Which is a satisfactory value.

F-statistic calculated value = 37.246 F-statistic critical value= 6.39 (num: k-1=4, denm: n-k=4) at 5%

significance As F-calculated> F-critical value, we reject the null hypothesis at

the 5 % level of significance that there is no statistical significance between the independent and dependent variables.

CONCLUSION

Only sugar Price, population, sugar production data have a significant impact over the annual sugar consumption.

RECOMMENDATIONS

There should be no stocking limits for Sugar thus Traders and millers will be freed from adhering to any stocking limits, so that modern warehouses can be built.

The Government should buy at prevailing market rates or import to build its stocks and feed the PDS.

Indian sugar prices in the open market are now integrated with world sugar prices. i.e. Global sugar rates affect the local rates. Futures trading should be allowed in sugar. It would transmit the right signals on what is happening in global and Indian markets.

BIBLIOGRAPHY



http://www.blonnet.com/2010/01/25/stories/2010012551241300.htm


http://www.economywatch.com/business-and-economy/sugar-industry.html




http://www.moneycontrol.com/news/market-edge/hot-picksthe-sugar-sector_194012.html

http://www.valuenotes.com/lkp/lkp_sugar_02sep04.pdf?ArtCd=34226&Cat=I&Id=74



























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statistical analysis of sugar consumption in india

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