SUGAR I DUSTRY PROFILE

Sugar Industry is very important to the Indian National economy, because of its multiple contributions in the shape of employment and provision of raw materials to other industries. Sugar is made by some plants to store energy that they don't need straight away, rather like animals make fat. People like sugar for its sweetness and its energy so some of these plants are grown commercially to extract the sugar. Sugar is produced in 121 Countries and global production now exceeds 120 Million tonnes a year. Approximately 70% is produced from sugar cane a very tall grass with big stems which is largely grown in the tropical countries. The remaining 30% is produced from sugar beet a root crop resembling a large parsnip grown mostly in the temperate zones of the north.

It had been rightly pointed out by the Late Shri. Fakhrudin Ali Ahmed when he was Minster for food and agriculture, at the eleventh annual general meeting of the national federation of co-operative factories limited. The cooperative factories in some parts of the country have become symbol of industrializations in the development of ancillary industries providing opportunities of employment to the village folk. The industry provides employment to about 35 million cultivations and 3.6 lakhs skilled and unskilled workers. Further, it accounts for providing employment to crores of thousands in the sugar trade, in the transport of sugarcane and sugar etc.

Its by - products are used as raw materials in industries such as alcohol, plastics, synthetics,

rubber, and fiberboard Pharmaceuticals, paper, etc. The sugar industry in recent years has begun to export sugar, thus earning valuable foreign exchange .Besides it provides Rs. 300 crores in the form of taxes to the exchange consisting these many facts of important of the industry ,it ranks second among the major consumer industries of this country, next only to cotton, Textile industry . The sugar industry is mostly oriented to a single material, namely sugarcane that forms 60% of the total cost of production. Therefore, the availability of sugar cane and facilities of transporting raw material of the sugar mill naturally condition the industry of sugar proximity to. The raw material is essential because the sucrose content of the sugar cane begins to decrease soon after the cane is cut obtained as the factories for generating power use a byproduct during the producing. Therefore, power is not at all a dominating factor determining the location of sugar industry .in recent times, techniques feasibility and economics visibility of the sugar projects have been given importance in the location of sugar industry. In the words of Dr.M.Mehta, The location pattern of the sugar industry is greatly influenced by the character local distribution depends entirely of physical and Geographical factors, nature plays a dominant role in the location industry. In India, major sugarcane growing states are Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Andhra Pradesh. These

six states contribute more than 85% of total sugar production in the country; Uttar Pradesh and Maharashtra together contribute more than 57% of total production.

HISTORY OF SUGAR I DUSTRY

The discovery of sugarcane, from which sugar as it is known today, is derived dates back unknown thousands of years. It is thought to have originated in New Guinea, and was spread along routes to Southeast Asia and India. The process known for creating sugar, by pressing out the juice and then boiling it into crystals, was developed in India around 500 BC. Its cultivation was not introduced into Europe until the middle-ages, when it was brought to Spain by Arabs. Columbus took the plant, nearly held, to the West Indies, where it began to thrive in a most favorable climate. not until the eighteenth century that sugarcane cultivation was began in the United States, where it was planted in the southern climate of New Orleans. The very first refinery was built in New York City around 1690; the industry was established by the 1830s. Earlier attempts to create a successful industry in the U.S. did not fare well; from the late 1830s, when the first factory was built. Until 1872, sugar factories closed down almost as quickly as they had opened. It was 1872 before a factory, built in California, was finally able to successfully produce sugar in a profitable manner. At the end of that century, more than thirty factories were in operation in the U.S. India has been known as the original home of sugar and sugarcane. Indian mythology supports the above fact as it contains legends showing the origin of sugarcane. India is the second largest producer of sugarcane next to Brazil. It was

Presently, about 4 million hectares of land is under sugarcane with an average yield of 70 tonnes per hectare. India is the largest single producer of sugar including traditional cane sugar sweetness. Khandsari and Gur equivalent to 26 million

tonnes raw value followed by Brazil in the second place at 18.5 million tonnes. Even in respect of white crystal sugar, India has ranked No.1 position in 7 out of last 10 years. It is thought that cane sugar was first used by man in Polynesia from where it spread to India. In 510 BC the Emperor Darius of what was then Persia invaded India where he found "the reed which gives honey without bees". The secret of cane sugar, as with many other of man's discoveries, was kept a closely guarded secret while the finished product was exported for a rich profit. Sugar was only discovered by western Europeans as a result of the Crusades in the 11th Century AD. Crusaders returning home talked of this "new spice" and how pleasant it was. The first sugar was recorded in England in 1099. The subsequent centuries saw a major expansion of western European trade with the East, including the importation of sugar. It is recorded, for instance, that sugar was available in London at "two shillings a pound" in 1319 AD. This equates to about US$100 per kilo at today's prices. So it was very much a luxury. In the 15th century AD, European sugar was refined in Venice, confirmation that even then when quantities were small, and it was difficult

to transport sugar as a food grade product. In the same century, Columbus sailed to the Americas, the "New World". It is recorded that in 1493 he took sugar cane plants to grow in the Caribbean. The climate there was so advantageous for the growth of the cane that an industry was quickly established.

By 1750 there were 120 sugar refineries operating in Britain. Their combined output was only 30,000 tons per annum. At this stage sugar was still a luxury and vast profits were made to the extent. That sugar was called "white gold". Governments recognized the vast profits to be made from sugar and taxed it highly. In Britain for instance, sugar tax in 1781 totaled 326,000, a figure that had grown by 1815 to 3,000,000. This situation was to stay until 1874 when the British government, under Prime Minister Gladstone, abolished the tax and brought sugar prices within the means of the ordinary citizen. Sugar beet was first identified as a source of sugar in 1747. No doubt the vested interests in the cane sugar plantations made sure that it stayed as no more than a curiosity, a situation that prevailed until the Napoleonic wars at the start of the 19th century when Britain blockaded sugar imports to continental Europe. By 1880 sugar beet had replaced sugar cane as the main source of sugar on continental Europe. Those same vested interests probably delayed the introduction of beet sugar to England until the First World War when Britain's sugar imports were threatened. Today's modern sugar industry is still beset with government interference at many levels and throughout the world. The overall pattern

can be seen by investigating the mid 1990. Annual consumption is now running at about 120 million tonnes and is expanding at a rate of about 2 million tonnes per annum. The European Union, Brazil and India are the top three producers and together account for some 40% of the annual production. However most sugar is consumed within the country of production and only approximately 25% is traded internationally. India is the second largest producer of sugarcane, next to Brazil the latter produces primarily raw sugar while India produces almost exclusively white crystal sugar. In India apart from sugar, other traditional sugarcane sweetness Khanda Sari and gur are also produced for the rural markets. Taking all sweetness sugar khandasari and gur, India is worlds largest producer of sugar followed by the Brazil in the second place. There are 582 sugar milks operating in India with an aggregate installed capacity of 16.2 million tonnes. Of these 205 are in the private sectors 316 in the cooperative sector and 61 in the public sector. The Sugar Industry has been totally regulated and controlled for the past 50 years. Sugar is declared as an essential commodity under the

essential commodity act 1955 and a plethora of legislations and control orders regulate almost every aspect of the industry, with the objective of increasing production and also making available sugar at affordable prices to the consumer controls included licensing, administrated price for sugarcane, reservation of cane areas, control over the price of sugar and restriction on sale/movement of the by- product molasses were controlled for a long time. Under the sugar cane control order 1966 the Government fixes the statutory minimum price for cane every year based on the recommendations

of the commission on Agricultures costs and price. Sugar is a seasonal industry. The crushing season ranges between 180 and 240 days in a year depending on the location.

Locational Factors
In recent years, the location factors have influenced the dispersal of sugar cane cultivated in subtropical regions and the development of cane in the south is mainly responsible for bringing about location changes in the industry. Further the sugar industry has received greater inputs from the completion of numerous irrigation projects like the Irwin canal in Mysore (Karnataka), Nizamsagar and Thungabadra projects in Madras (Tamilnadu). Added to this, the discriminatory policies in pursued by the government are also responsible for the faster rate of the growth of the industry in the south. Given transport facilities and access is necessarily dependent up on the availability of cane in the region .This concentration is substantiated from observation of the trend of sizes established in different regions of this country in relation to availability of cane. Comparatively the size of the sugar mills in Uttar Pradesh, Bihar and Maharastra where continuous availability of cane is assured is observed to be large. Grant of production to the Industry in 1931 also helped the units to increase their size. The average per day crushing capacity of the sugar factories working in our country varies from 220 tonnes to 3200 tonnes per day. In Uttar Pradesh and Bihar majority of the sugar mills have a cane crushing capacity of 2500 tonnes of sugar cane per day is considered to be an economical unit, under the present day working conditions.

Since 1950, the industries growth reveals that not with standing the controls and regulations, in the industry did grow substantially. While, the number of factories rise from 139 in 1950 51 to 423 in 2000 - 2001 the installed capacity increased ten fold from 69.2 million tonnes to 300 million tonnes in 1999 2000; Sugar production swelled from 1.1 million tonnes to 18.6 million tonnes during the same period. The government laid down targets for sugar production; consumptions installed capacity during each of the five year plans and ensured the growth of industry the growth of industry to meet the steady raise in consumption.

SCE ERIO OF SUGAR I DUSTRY

India is the largest consumer and second largest producer of sugar in the world (Source: USDA Foreign Agricultural Service). The Indian sugar industry is the second largest agro-industry located in the rural India. The Indian sugar industry has a turnover of Rs. 500 billion per annum and it contributes almost Rs. 22.5 billion to the central and state exchange as tax, and excise duty every year (Source: Ministry of Food, Government of India). It is the second largest agro-processing industry in the country after cotton textiles. With 453 operating sugar mills in different parts of the country, Indian sugar industry has been a local point for socio-economic development in the rural areas. About 50 million sugarcane farmers and a large number of agricultural laborers are involved in sugarcane cultivation and ancillary activities, constituting 7.5% of the rural population. Besides, the industry provides employment to about 2 million skilled/semi skilled workers and others mostly from the rural areas. (Source: ISMA Website accessed on May 16, 2005.) The industry not only generates power for its own requirement but surplus power for export to the grid based on by-product bagasse. It also

produces ethanol, an ecology friendly and renewable energy for blending with petrol. Indian sugar industry has grown horizontally with large number of small sized sugar plants set up throughout the country as opposed to the consolidation of capacity in the rest of the important sugar producing countries, where greater emphasis has been laid on larger capacity of sugar plants. Gone are those days when industries and its participants were highly protected with control and protectionism policies. In the process of liberalization of economic system, decontrolling policies like decontrol of sugar, steel, fertilizers etc., Sugar industry is highly subsidized so far it also effects with new economic power. The demand for sugar has been increasing due to increase in its consumption out of changing habits of the people including common man and the need of the sugar also demands the sugar industry to meet the internal profit of its production and is to be exported to earn foreign currency with in the changing market. Sugar cane growers are facing inventory problems. Transportation problem, marketing problems, many of the growers are illiterates who are not competent to grow. Sugar cane crop is on scientific lines. The financial problem is also other important one with which they can not take decisions in the time to improve quality and productivity, high transportation. Costs prices are not increasing in proportion to the increase in cost of production due to inflationary tendencies.

The sugar producing unit purchase sugar cane from the sugar cane growers. Therefore management of these units have to adopt marketing concept that is customer orientation.(Growers orientation) Various incentives are available from the government for developing sugar industry .But the industry in India is facing several problems.

Economy role:
India is one of the largest sugar producing and consuming country in the world. The sugar industry plays a vital role in rural areas and provides direct and indirect employment in the country. India emerged as the largest producer of white sugar in the world. The central government has already de-licensed. The sugar productions they purpose to decontrol the release mechanism by introduction of reduce on sugar price. At present India enjoys second place in the world sugar production. Central as well as State government has been getting 140 crores in the form of excess taxes from sugar industry. The industry has been providing substance to 5.5 lakhs workers and sustaining about 4.5 crores agricultures. Its total capital investment is amount to Rs.1560 crores. The sugar industry has a unique place in Indian economy and rural development because of its multiple contributions in terms of employment and provisions of raw materials to other industries. The sugar industry is the second largest agro based processing industry. Thus occupies a vital role among the 4 major sugar producing countries in the world. The other 3 are being USA, Brazil and Cuba.

Imports & Exports of Sugar:

In view of cost of cane and Sugar production in India, it could not complete with other favorable countries and to honor commitments and maintain international standard quality. The sugar exports began in the year 1958 under the Sugar export promotions act up to middle of 1961. Government did not subsidize losses on exports and sugar factories got prorate payment. However in view of substantial quantity of Sugar in later years government stopped subsidizing these losses. The export policy has been largely influenced by the need for earning foreign exchange.

GROWTH OF SUGAR I DUSTRY

There were only twenty nine factories in India during the year 1931. Protection granted to the industry in 1931 brought tremendous growth in the number of locations. The number of factories in operation had grown from 29 to 140 in 1950 1951. Out of which 110 factories were in northern parts of India. During the next decade the number of factories increased to 174. Out of which 116 factories are in the sub tropical region of northern India. Finally, the number of factories has grown from 200 in 1965 to 1966 to 417 in 1994 to 1995 of which 75% of the factories are located in the northern India. The industry is predominantly localized in the Uttar Pradesh, particularly in the districts of Meerut, Saharnpur, Bijmour, Barely, Muzaffar Nagar Moradabad and Rampur, next Uttar Pradesh. The industry is mainly concentrated in Maharastra, Bihar and in the eastern costal districts of Andhra Pradesh. If we refer to the historical event in the sphere of sugar industry, Uttar Pradesh and Bihar occupied the predominant position as far as the location pattern of the industry is concerned, and still these states are enjoying the same position. The reason of such heavy concentration in the

states of Uttar Pradesh enjoys in respect of cane cultivation is due to the advantages confirmed by the rich and fertile alluvial soil of the genetic plain, the bulk of which contains adequate quantities of lime and potash, the pressure of thin varieties of cane admirable suited in the climate cheap and extensive of cheap and extensive irrigation facilities. The concentration of sugar cane crop incompact blocks enables the sugar factories to get fresh suppliers of sugar cane direct from the fields. Moreover, the cost of the cane cultivation is less and the cultivators are not accustomed to raise alternative crops like ground nuts, chilies, plantains etc.

STATE WISE SUGAR PRODUCTIO

(000tonnes)

STATE
A.P Gujarat Karnataka Maharastra U.P Tamilnadu Punjab Bihar

2002-03
1048 1055 1550 5613 5260 1839 593 342

2003-04
1210 1252 1868 6219 5651 1644 586 408

2004-05
886 1066 1116 3175 4552 921 390 274

2005-06
1203 832 1132 2303 5152 1475 337 270

2006-07 2007- 08
1276 1244 2009 5264 5564 2138 388 419 1924 1390 2542 9013 8352 2426 550 483

All India

18528

20145

13546

13600

19300

28200

Sugar Cane production

Year

o. of factories

Cane production

(million tones) 1930-31 1940-41 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 29 148 138 174 215 315 385 436 434 453 422 400 455 582 582 36.35 51.97 57.05 110 126.37 154.25 241.05 295.96 297.21 287.38 233.86 237.06 281.17 345.31 329.09

umber of Factories 2007-08

STATES Punjab Haryana Rajasthan U.P Uttaramchal M.P Chandigarh Gujarat Maharastra Bihar Assam Orissa West Bengal A.P Karnataka Tamilnadu Pondicherry Kerala Goa Total

Public 1 33 2 2 15 1 1 3 3 61

Private 7 3 1 70 4 4 23 14 1 5 1 26 25 19 1 1 205

Co-Operative 16 12 1 28 4 5 1 22 165 2 3 15 23 16 1 1 1 316

Total 23 15 3 131 10 11 1 22 188 29 3 8 2 42 51 38 2 2 1 582

Sugar Factories in India Zone wise Index

A.P:
1. The Anakapalle 2. The Etikoppaka 3. The Thandava 4. The Chodavaram 5. NCS Sugars 6. Sri Vijayarama Gaipathi 7. GMR Industries 8. The KCP (Vuyyuru) 9. The KCP (Lakshmipuram) 10. Delta Sugars 11. Nava Bharat 12. Sri Saravaraya 13. The Andhra Sugars (Tanuku) 14. The Andhra (Taduvai) 15. Jeypore Sugars 16. The Andhra (Bhimadole) 17. Nizam Deccan (Shakarnagar) 18. Nizamabad

19. Gayatri Sugars 20. Trident Sugars 21. Nizam Deccan (Mombogipally) 22. Ganapati 23. The Chittpr 24. KBD Sugars 25. Sri Venkateswara Sugars 26. Prudential 27. Sudalagunta Sugars 28. The Kovur 29. Empee 30. Sarita Sugars 31. Nizam Deccan (Muthyampeta) 32. NVR Sugars 33. Madhu con Sugars 34. The Kakatiya cement 35. Sagar Sugars 36. GSR Sugars 37. Rayalaseema Sugars 38. The Cuddapah Sugars

Problems of sugar industry in India:

1. Excessive control: The industry is suffering from changing of Government policies. The Government has no fixed policy regarding the price and distribution of sugar. The production of sugar is influenced by the purchasing price of sugar cane depending upon the cost of cultivation, the inefficiency and uneconomic nature of production in sugar mills to yield and short crushing season. The high pressure sugar cane and the heavy excise duties by the government are responsible for the high cost of production of sugar in India. 2. Under Utilization of by-products: In sugar production we get two by-products, molasses and bio-gas, while molasses can be used in alcoholic preparation. These factories are not well developed in India. And bio-gas can be used in paper industry. But this is not being utilized properly by our paper industry. In India the yield of sugar cane per acre and percentage recovery of sugar from cane juice is very low. 3. Short Crushing Season: Although the land is utilized through out the years, crushing season is limited to 3-4 months in a year. Hence factories have to be closed for the remaining period. This is making uneconomic too.

4. Obsolescence: Most of the factories in the private sector were set up five to six decades ago. Their machinery has by now duplicated. The cost of production of such units is unduly owing to less mechanical efficiency and more down time. It will require more money for modernization/ renovation of such factories. The worst handicapped, cropping, the industry is the low level of productivity due to inadequate irrigation facilities and ultimately supply of quality seed, material. 5. Technology: The level of technology in the Indian sugar industry is quite high and a number of developing countries have borrowed Indian Sugar technologies. Unfortunately however many of Indian factories had been set up in early 30s and have become absolute. For these the need of the hour is modernization, rehabilitation and expanding also. Attention needs to be paid to cane development. 6. Output trends: Over production is due to cyclical nature and seasonal conditions and cultivations of average sugar cane. The fluctuation in the production of sugar cane is a major problem of the day.

Sugar industry in A.P:

AP occupies 4th place in respect of sugar growing in the country. Sugar cane is cultivated in the districts of Srikakulam, Vizag, East Godavari, West Godavari, Krishna, Nizamabad, Cuddapah, Chittor and Guntur. The

mill at Bodhan in Nizamabad district of AP is the highest sugar producing unit in Asia. Three more units were set up under the same management. In our country total cane under sugar cane 1/4th belongs to AP and this occupies 9th place in the industry.