SUPPLY CHAIN OF SUGAR

Scheme

Agriculture perspective

Industrial Perspective

Use:Molasses: alcoholic originEthanol

Scheme

Agriculture perspective

Industrial Perspective

Use:Molasses: alcoholic originEthanol

Agricultural perspective

Sugar is extracted from two different raw materials—sugarcane and beet. Both produce identical refined sugar.

Sugarcane is grown in semi-tropical regions, and accounts for around two-thirds of world sugarproduction. Beet is grown in temperate climates, and accounts for the balance one third of world production.

In India, sugarcane is the key raw material for the production of sugar. Most of the sugarcane produced in India is a 10-12 month crop planted during January to March. In northern Maharashtra and parts of Andhra Pradesh and Karnataka, there is also an 18 to 20 month crop. In most areas, the 12-month crop is followed by just one ratoon crop, that is, a new crop grown from the stubble of the harvested crop. At present, sugarcane is being cultivated throughout the country except in certain hilly tracts in Kashmir, Himachal Pradesh, etc.

The sugarcane growing areas may be broadly classified into two agro-climatic regions—subtropical and tropical.

The major sugarcane producing states in the sub-tropical areas include Uttar Pradesh(UP), Uttaranchal, Bihar, Punjab, and Haryana. In tropical areas of India, sugarcane is grown primarily in Maharashtra, Andhra Pradesh (AP), Tamil Nadu (TN), and Gujarat.

Agricultural perspective

India – origin of Sugar & Sugarcane

Indian sugar industry - important agro based industry

Second largest producer of Sugarcane, next to Brazil

Dependents - 45 Million people (7.5% of rural population)

35 million farmers &

Area under Sugarcane: 4.5 M Ha (2.2 % of India's total cropped area)

70 tonns per hectare ( Around 355,520,000 tonns per year )

Sugar industry accounted for 1.91% of industry GBC of SCBs.

46 % - White Crystal 34 % - Khandsari / Gur 10 % - Juice

In India it is the second largest agricultural industry after textile industry

Employs 0.5 M skilled & semi skilled workers

Total cane produced in the country value at about Rs.30000 crores per year

1% Of GDP

Rs.1650 crores to the Central Exchequer as excise duty and other taxes

Rs.600 crores is realized by the State Governments annually through purchase tax and cess on cane

10 million employment generated

2006 - 08, 9.5 million tonnes of sugar exported

Average capacity of mill 3200 tons per day

Sector Number

Co operative 317

Private 229

Public 62

Total 608

Industrial perspective

.  India has 20% of the total sugar mills in the world and accounts for about 15% of the global production.

Year Area (M Ha)Cane Production

( M Tons)

2001-02 4.41 297

2002-03 4.36 282

2003-04 3.99 236

2004-05 3.75 232

2005-06 4.14 267

2006-07 4.25 280

2007-08 4.5 290

2008-09    

2009-10    

2010-11

Growth of Indian Sugar Industry

Sugar Production ( M Tons)

 

 

Process of refining

“sugar is produced in the field and extracted in the sugar factory”

1.Pressing of sugarcane to extract the juice.

2.Boiling the juice until it begins to thicken and sugar begins to crystallize.

3.Spinning the crystals in a centrifuge to remove the syrup, producing raw sugar. 4.Shipping the raw sugar to a refinery where it is washed and filtered to remove remaining non-sugar ingredients and color.

5. Crystallizing, drying and packaging the refined sugar

In fact, sugar recovery mainly depends upon following three factors

1. Sucrose content in sugarcane

2. Cane supply arrangement &

3. Plant and machinery.

Capacity utilization Sugar industry depends on

1. Volume of cane crushed in a day 2. Recovery rate which generally depends on the quality of the cane and 3. Length of the crushing season

Various Products from Sugarcane

Sugarcane

Gur Molasses Baggasses

-Most popular in India - Larger part of the sugar cane was used for making Gur . - Its used in Ayurvedic medicine

- Used as cattle food- Used in alcohol industries- Used in production of ethanol

-Used as replacement -of coal in specialized boilers

- Used to produce elctricity- Used for producing paper and ceiling

2006-07

2007-08

2008-09

Per head use

Million Tonns   Kgs

UP 5.4 6.3 9.65 35.2

MH 2.2 5.2 9.3 40.9

KA 1.1 1.9 2.4 23.3

TN 1.1 1.8 2.6 29.1

AP 0.9 1.2 1.4 40.9

GUJ 0.8 1.1 1.4 68.5

PUN 0.3 0.3 0.5 71.5

Sugar Map of India

6 states contribute to 85% of production

Sugar is produced in 122 countries ( 67 from Cane, 55 from Beet )

78 % of sugar is produced from Cane, balance from Beet

  2007-08 2006-07 2005-06 2004-05 2003-04

Brazil 34.2 32.6 32.6 27.7 26.1

India 28.5 30.7 21 14 14.8

EU 17.5 17.4 21 22 20

China 13.6 13 10 10 11

USA 7.6 7.6 6.7 7 8

Thailand 7.9 7 5 5.4 7

Mexico 5.6 5.5 5.5 6 5.3

Others 68 68.3 67.1 65.1 64.3

Total 182 182 169 157 156

Global Production

World consumption of cane sugar 160 mt estm

Productivity

Indian Sugar Balance

  SS05E SS06E SS07E SS08E SS09E SS10E SS11E SS12E

million tonnes                

OPENING STOCK 8.5 4.9 3.4 9.2 8.7 3.2 2.9 3.3

PRODUCTION 12.7 19.3 28.4 26.4 14.5 18.5 25 29

IMPORTS 2.1 0 0 0 3 5 0 0

CONSUMPTION 18.5 19.6 20.8 22 23 23.8 24.6 25.3

EXPORTS 0 1.1 1.7 4.9 0 0 0 0

CLOSING STOCK 4.9 3.4 9.2 8.7 3.2 2.9 3.3 7

World Sugar Balance

Competitive Edge

 

MARKET PRICE M S P

RICE WHEAT COTTON SUGAR RICE WHEAT COTTONSUGARCANE

  Rs/ Quintal

Rs/ Quintal Rs/kg Rs/

QuintalRs/

QuintalRs/

QuintalRs/

QuintalRs/

Quintal

1999-00 914 742 34          

2000-01 909 846 31          

2001-02 897 1008 36          

2002-03 859 1126 39          

2003-04 920 1107 41 1356        

2004-05 1061 962 42 1681        

2005-06 981 1074 37 1848 570 650 1760 80

2006-07 1040 1496 40 1755 580 750 1770 80

2007-08 1226 1435 47 1384 645 1000 1800 81

2008-09 1417 1571 70 1788 8550 1080 2500 81

2009-10 1599 1650 67 2994 950 1100 2500 108

5yrs GROWTH 61 65 55 62 60 59 70 74

World Sugar Balance

2008/09(min tonne, raw value)

2007/2008(min tonne, raw value)

Production 161.527 168.611

Consumption 165.801 162.241

2008 statistics Ethanol in BrazilIn 2008 Brazil produced 24.5 billion litres of ethanol Brazil is 2nd largest producer of ethanol. 37.3% of world’s total ethanol used as fuel.45% Brazilian vehicles uses ethanol.

Ethanol made from sugar cane would be "100% green".Ethanol reduces emissions of carbon monoxide, toxic chemicals - resulting in better overall air quality. With second largest in sugarcane India can produce around 4476 gallons per year. But....India imports 70% of its annual crude petroleum required which is approx. 110 million tons. Expenditure on crude purchase is in the range of Rs 1600 billion per year.

Country Sugarcane production in tonnes

Production of Ethanol in gallons

Brazil 514,079,729 6,472.2

India 355,520,000 66.0

Strengths:Socio economic development in rural India.Diversified crops and cropping patterns.Favourable environmental conditions2.7% of land is used in Cane Production4th lowest cost sugar producers 1/4th of that in EuropeStrong Govt supportEver lasting demand Global prices to move up – incremental positive

Weaknesses:Obsolete technology & Lack of professionalismOld and inefficient methods of cane production.Shortage of cane supplyUnreliable weather - sometimesDiversion of cane to unorganised sectorFarmer shift to paddy, wheat, oil seeds, puses...Transport delay

S W O T A

N

A

L

Y

S

I

S

Opportunities:Rising prices & Huge export ordersOngoing increase in demand year after yearUpgraded technology – fullest By-product utilizationNew varietiesShift of Brazil to ethanol productionIndia includes Sugar as essential commodity

Threats:Political interestsSugar production being more volatile rather cane productionGround water availability (farmers shifted to multiple crops)DroughtsPest & diseases

S W O T A

N

A

L

Y

S

I

S

Due to heavy government intervention over price fixation Sugar has never been a profitable product and the main source of profiteering for the sugar mills comes from selling byproduct likes molasses, ethanol

Good Agricultural Practices

• Water is major problem.

25,000 kg of water to produce 100 kg of sugarcane.

• In Maharastra - 60% of water is used to irrigate 500,000 hectares of sugarcane

- This means other crops get little water or no water at all.

Sustainable Sugarcane Initiative (SSI)

Improving the productivity of land, water, and labour Reduce crop duration, providing factories a longer crushing season

Produce at least 20% more sugarcane while reducing water by 30% and chemical inputs by 25%.

Growing sugar cane amongst paddy and vegetable crops

Developed a way to open up canes to allow more light , plus increase production for a smaller plant out.

Decrease water wastage, kill monoculture, provide extra income.

Growing Biodynamic Sugar cane in India

Factors affecting productivity Low cost management practicesWater managementDearth of good quality saplingsDrainage – raised bedsImproved timeliness of operationsField preparationVariety selectionWeed controlBalanced FertilizationHarvestingCrop rotation including legumes – reduce N input after Soyabean

Need demand driven productionSupplying higher value marketsValue add to existing enterprisesIntroduce other enetrprises

Easy to say, but difficuly to implement

Introduce other enterprises

‘water channels (three)

water channels (six)

water channels (two)’

Farmers Innovation

75% water reduction, without use of chemicals and pesticides.

40 tonnes per acre can be raised to 60 tonnes

Major Strategies & their Impact on Indian sugar Industry:

Sugarcane Pricing policyGovt Control on SugarGovt policiesGovt relief to sugar industry & farmersCentral govt announces support measures for sugar mills. Government declared the new policy on August 20,1998

licenses for new factories, which shows that there will be no sugar factory in a radius of 15 km.

Setting up of Indian Institute of Sugar Technology at Kanpur

In 1982, the sugar development fund was set up for modernization of the industry.

India has the potential to become world’s largest exporter by removing the missing leads.

Indian Government on Sugar Industry

Thank you