Price Policy Punjab 5.3 PDF

Price Policy for
Sugarcane
SUGAR S EAS ON 2019-20
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Commission for Agricultural Costs and Prices
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Department of Agriculture, Cooperation and Farmers Welfare
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Ministry of Agriculture and Farmers Welfare
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Government of India
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August, 2018
Vijay Paul Sharma Commission for Agriculture Costs and Prices
Chaiman Department of Agriculture, Cooperation
Tel : 011-23385216 and Farmers Welfare
Fax : 011-23383848 Ministry of Agriculture and Farmers Welfare
Krishi Bhawan, New Delhi-110 001
Preface and Acknowledgements
I have the privilege and honour to submit the report of “Price Policy for Sugarcane: The
2019-20 Sugar Season”. The report contains recommendations of Fair and Remunerative
Price (FRP) of sugarcane and other non-price factors. While making FRP recommendation,
the Commission has taken into account various factors such as cost of production, demand-
supply and prices situation in domestic and world markets, margins for sugarcane growers
on account of risk and profits, realization made from primary by-products, inter-crop price
parity, terms of trade, likely impact of FRP on general price level and a minimum of 50
percent as the margin over the cost of production. I hope these recommendations will
serve interests of cane growers, sugar mills, and consumers; incentivise farmers to adopt
new technologies to promote efficiency and competitiveness, and help in achieving the
goal of doubling farmers’ income by 2022.
Preparation of this report required the concerted efforts of a number of individuals

and institutions. First and foremost, I would like to express my sincere thanks to
sugarcane farmers, senior officers from Central and State Governments, sugar industry
representatives, and other stakeholders for providing valuable insights and information
during the meetings and for preparation of this report. I am grateful to the Directorate of
Economics and Statistics, Ministry of Agriculture & Farmers Welfare for providing data on
cost estimates for sugarcane production.
My sincere appreciation to the officers and staff of the Commission, who contributed
to this report. Special thanks to Dr. Shailja Sharma, Member Secretary for her excellent
support in preparation of this report. I wish to thank and acknowledge the contributions of
advisors Ms. Nutan Raj, Mr. K. M. M. Alimalmigothi and Mr. D. K. Pandey. The report would
not have been possible without support and contribution of Mr. Nikhil Kumar Agarwal,
Dr. Harish Kumar Kallega, Mr. Amit Sahu, Ms. Reeta Yadav, Mr. Ayush Punia, Mr. Sube Singh,
Mr. Raj Kumar, Dr. S K Gupta, Mr. Byasadev Naik, Ms. Shilpa Taneja, Dr. Surendra Singh,
Dr. Bhavin Lukka, Mr. Mohd Shoeb, Mr. S. K. Srivastava, Mr. A. K. Pandey, Ms. Meenakshi
Choudhary, Mr. Vedprakash Meena, Mr. Deepdyuti Sarkar, Mr. Md. Abdul Aleem and
Mr. Chandra Kumar. I would like to thank them all for their contribution and support.
August 2018 (Vijay Paul Sharma)

Contents
Chapter Description Page
No. No.
Acronyms xii
Summary of Recommendations xiv
Price Policy Recommendations xiv
Contents
SAP vis-à-vis FRP: Market Distortions xiv
Price Stabilisation Fund xv
Payment of Dues to Sugarcane Growers xv
Incentivising Sugar Recovery xv
Non-Price Policy Recommendations xvi
Diversification of Sugar Industry: Ethanol – An Opportunity xvi
Cane Area Reservation and Minimum Distance Criterion xvi
Crop Diversification and Intercropping xvi
Mechanisation of Sugarcane Cultivation xvi
1 Overview 1
Introduction 1
Production and Consumption 1
Pricing of Sugarcane 3
Payment to Sugarcane Growers 4
Diversification of Sugar Industry: Ethanol – An Opportunity 5
Incentivising Efficiency: Benefit Sharing between Farmers and Mills 5
Crop Diversification and Intercropping 6
Mechanisation of Sugarcane Cultivation 6
Structure of the Report 7
2019-20 Sugar Season v

Price Policy
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No. No.
2 Demand-Supply and Pricing Policy 8
Stock-to-Use Ratio 10
Domestic Price Trends 11
State Advised Price (SAP): Distortionary Policy 12
Cane Area Reservation and Minimum Distance Criteria 15
Sugar Recovery from Sugarcane 16
Recapitulation 17
3 Productivity of Sugarcane 18
Productivity Growth Trends 19
Annual Growth in Area, Production and Productivity 21
District-Level Productivity of Sugarcane 22
Installed Capacity and Capacity Utilisation 23
Per Drop More Crop – A Case for Drip Irrigation and Fertigation 24
Contents
Improved Technology and Practices 25

Recapitulation 25
4 Trade Patterns, Competitiveness and Market Outlook 26
Global Scenario: Production and Trade 26
Production 26
Trade 29
Patterns of India’s Trade in Sugar 30
Competitiveness of Indian Sugar 31
Domestic and World Price Dynamics 31
Trade Policy 34
Market Outlook 36
5 Costs and Returns 38
Costs and Returns of Sugarcane during TE2016-17 39
Movement in Agricultural Labour Wages and Farm Inputs 40
Cost Projections for Sugar Season, 2019-20 43
Relative Returns 45
Recapitulation 45
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6 Considerations and Recommendations 47
Pricing of Sugarcane and Cane Arrears 47
Price Stabilisation Fund 47
Payment of Dues to Farmers 48
Incentivising Sugar Recovery 48
Cane Area Reservation 48
Diversification of Sugar Industry: Ethanol – An Opportunity 49
Trade Policy 49
Crop Diversification and Intercropping 49
Micro Irrigation 50
Mechanisation of Sugarcane Cultivation 50
Cost of Production and FRP of Sugarcane 50
Contents
2019-20 Sugar Season vii

LIST OF CHARTS
Chart No. Title Page No.
Chart 1.1 Production and Consumption of Sugar, 2001-02 to 2017-18 2
Chart 2.1 Share of Major Producers in Sugarcane Production 9
Chart 2.2 Share of Major Producers in Sugar Production 9
LIST OF CHARTS
Chart 2.3 Trends in Average ex-Mill Prices of Sugar in Major Producing 11

States
Chart 2.4 Domestic Wholesale and Retail Price of Sugar 12
Chart 2.5 FRP and SAP in UP during 2010-11 to 2018-19 15
Chart 2.6 All- India Cane Productivity, Sugar Productivity and Sugar Re- 16
covery 2008-09 to 2017-18
Chart 2.7 State-wise Cane and Sugar Yield in TE 2017-18 17
Chart 3.1 Productivity of Sugarcane in Major Producing Countries in the 19
World
Chart 3.2 Trends in Productivity and Instability of Sugarcane in India 19
Chart 3.3 All India Area, Production and Productivity of Sugarcane 2008- 21
09 to 2017-18
Chart 4.1 Major Producers of Sugarcane, TE 2016 27
Chart 4.2 Major Producers of Sugar Beet, TE 2016 27
Chart 4.3 Major Producers of Sugar, 2017-18 28
Chart 4.4 Major Exporters of Sugar, 2017-18 29
Chart 4.5 Major Importers of Sugar, 2017-18 30
Chart 4.6 Trends in India’s Exports of Sugar, 2006-07 to 2017-18 31
Chart 4.7 Trends in India’s Imports of Sugar, 2006-07 to 2017-18 31
Chart 4.8 Trends in Sugar Prices in the US, EU and World Markets 32
Chart 4.9 International and Domestic Wholesale Prices of Sugar in India 33
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Chart No. Title Page No.
Chart 4.10 Export of Sugar from India and its Impact on International 33
Prices
Chart 4.11 Import of Sugar by India and its Impact on International Prices 34
Chart 5.1 Average Gross Returns of Sugarcane, TE2016-17 40
Chart 5.2 Average Daily Wage Rates and Growth during 2017-18 41
Chart 5.3 Movements in Prices of Farm Inputs 42
Chart 5.4 Share of Inputs in Total Cost of Production (A2+FL), TE2016-17 43
Chart 5.5 Supply Curve and Projected Cost, Sugar Season 2019-20 44
Chart 5.6 Relative Average Gross Returns (%) with Respect to Sugarcane 45
LIST OF CHARTS
2019-20 Sugar Season ix

LIST OF TABLES
Table No. Title Page No.
Table 1.1 State-wise Details of Cane Price Arrears during 2017-18 3
Table 2.1 Stock to Use Ratio of Sugar (Sugar Season: October to September) 10
LIST OF TABLES
Table 2.2 World Sugar Balance Sheet 11
Table 2.3 FRP and RSF payable during 2010-11 to 2017-18 14
Table 2.4 Total Dues as per SAP & FRP in Uttar Pradesh (` Crore) 15
Table 3.1 Compound Annual Growth Rate and Coefficient of Variation of 20

Sugarcane
Table 3.2 Annual Growth Rate of Sugarcane, 2010-11 to 2017-18 22
Table 3.3 District-level Productivity Trends of Sugarcane 23
Table 3.4 State-wise Annual Installed Capacity (IC) and Utilized Capacity 24
(UC)
Table 5.1 Average Gross Returns of Sugarcane, TE2016-17 39
Table 5.2 Growth in Average Daily Wage Rates of Agricultural Labour States 41
and All-India
Table 5.3 Projected CoP of Sugarcane, Sugar Season 2019-20 44
Table 5.4 Relative Average Gross Returns (%) with Respect to Sugarcane 45
x 2019-20 Sugar Season

ANNEX Tables
Table No. Title Page No.

Table 1.1 Sugarcane: Area, Production and Yield 53
Table 1.2 State-wise Production of Sugar 55
Table 1.3 Comparative Statement of Fair and Remunerative Price (FRP)/ 56
ANNEX Tables
State Advised Price (SAP)
Table 1.4 Intra-Regional Variation in Sugar Recovery Rates in Uttar Pradesh 58
Table 1.5 Intra-Regional Variation in Sugar Recovery Rates in Maharashtra 59
Table 1.6 Comparative Analysis of Losses in Different Varieties of Sugarcane 60
due to Mechanical Harvesting vis-à-vis Manual Harvesting
Table 2.1 Ex-Mill Prices of Sugar in Major Sugar Producing States 61
Table 2.2 State-wise Sugar Recovery 62
Table 4.1 World Sugar Projections 63
Table 4.2 Top Ten Export Destinations of Indian Sugar 64
Table 4.3 Top Ten Sources of India's Sugar Imports 65
Table 5.1 Month-wise and State-wise Average Daily Wage Rates for 66
Agricultural Labour (Man)
Table 5.2 Farm Inputs - Wholesale Price Index (Base 2011-12=100) 68
Table 5.3 Sugarcane- Break-up of Cost of Cultivation 70
Table 5.4 All-India Projected Costs of Production of Sugarcane for 2018-19 72
over 2017-18
2019-20 Sugar Season xi

ACRONYMS
A2 Actual paid out cost

A2+FL Actual paid out cost plus imputed value of family labour
APEDA Agricultural and Processed Food Products Export Development Au-
thority
ASEAN Association of Southeast Asian Nations
C2 Comprehensive cost including imputed rent and interest on owned
ACRONYMS
land and capital

CACP Commission for Agricultural Costs and Prices
CAGR Compound Annual Growth Rate
CIPI Composite Input Price Index
CoC Cost of Cultivation
CoP Cost of Production
CS Comprehensive Scheme
CV Coefficient of Variation
DES Directorate of Economics and Statistics
DFIA Duty Free Import Authorization
DFPD Department of Food and Public Distribution
DIPP Department of Industrial Policy & Promotion
EBA Everything-But-Arms
EPA European Economic Partnership Agreements
FAI Fertilizers Association of India
FAO Food and Agriculture Organization
FRP Fair and Renumerative Price
GVO Gross Value of Output
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HSD High Speed Diesel
ICAR Indian Council of Agricultural Research
ISGIEIC Indian Sugar & General Industry Export Import Corporation Ltd
LIFFE London International Financial Futures and Options Exchange
MENA Middle East and North Africa
MIEQ Minimum Indicative Export Quotas
NAFTA North American Free trade Agreement
OECD Organisation for Economic Co-operation and Development
OGL Open General Licence
PSF Price Stabilisation Fund
RCAC Registration-cum-Allocation Certificate
RSF Revenue Sharing Formula
SAP State Advised Price
SCO Sugarcane Control Order
ACRONYMS
SSA Sub-Saharan Africa
STC State Trading Corporation
STT Settling Transplanting Technique
SUR Stock-To-Use Ratio
TE Triennium Ending
TRQ Tariff-rate quota
USDA United States Department of Agriculture
WPI Wholesale Price Index
WTO World Trade Organization
2019-20 Sugar Season xiii

Summary of Recommendations
Price Policy Recommendations

S.1. The Commission recommends Fair and Remunerative Price (FRP) for sugarcane as
`275 per quintal at 10 percent recovery level for 2019-20 sugar season and with every
0.1 percentage point increase in recovery, the FRP will increase by `2.75 per quintal.
The Commission also recommends that for every 0.1 percentage decline in sugar
recovery below 9.5 percent, the FRP should reduce by `2.75 per quintal. All-India
average recovery rate being 10.73 percent during 2017-18, the FRP recommended
works out to `295 per quintal. The projected A2+FL cost of production of sugarcane
at 10 percent recovery level is estimated at ` 156 per quintal for 2019-20 sugar
season. The modified A2+FL cost including cost of transportation and insurance
premium for the 2019-20 sugar season is projected at `182 per quintal. Given the
excess supply of sugar in the current season and anticipated increase in production
in the country in 2018-19 due to favourable weather conditions and increase in
cane acreage, an all-time high world sugar production and depressed sugar prices
the Commission recommends the same FRP as in the sugar season 2018-19.
SAP vis-à-vis FRP: Market Distortions

S.2. Some state governments announce SAP higher than FRP, which creates market
distortions and does not promote efficiency because SAP is neither decided
scientifically nor linked to sugar recovery. This distortionary policy has resulted in
mounting cane price arrears to farmers and weak financial health of sugar mills.
Hence, Commission recommends that announcement of SAP by the States should
be stopped immediately and FRP must be implemented in all states. In case, where
the state governments decide to continue with SAP, the difference between SAP
and FRP should be paid directly by the state government to farmers and other sugar
mills to make timely payment to cane growers.
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Price Stabilisation Fund
S.3. The Commission recommends that Revenue Sharing Formula (RSF) based on
revenue generated from sugar and primary by-products recommended by Dr.
Rangarajan Committee should be adopted by all states for long-term sustainability
of sugarcane sector. Only two states, Maharashtra and Karnataka, have so far
implemented RSF. As per RSF, during the period of low prices of sugar and major
by-products, cane price to be paid to farmers can be lower than the FRP. Since
farmers need to be paid the FRP as the minimum, the difference between FRP and
the final price determined based on RSF should be reimbursed to the farmers. The
Commission had recommended in its earlier reports, creation of Price Stabilisation
Fund (PSF) to pay the difference between RSF payment and FRP. However, this
fund could not be created due to uncertainty of funds/source of funds. Imposing
sugar tax on soft drinks/beverages as has been done in many developed and some
developing countries, could be one of the sources to raise revenue to support PSF.
In addition, during high prices of sugar and by-products, part of surplus generated
under RSF can be retained and deposited in the PSF. Dual pricing of sugar for
industrial and household sector can be another option. Since discontinuation of
levy sugar obligation on mills has reduced financial burden on sugar industry, sugar
mills should also contribute towards the PSF. The Commission recommends that a
Committee should be constituted to explore possibilities of creating and managing
PSF.
Payment of Dues to Sugarcane Growers

S.4. Sugar mills are unable to make payment to farmers within 14 days, as per provisions
of Sugarcane Control Order (SCO), as they generate revenue from the sale of sugar
and by-products after few weeks/months. Mills take loans from banks to make cane
payments to farmers, which increases their costs. The industry has requested to
explore feasibility of payment to farmers in instalments as is a practice in Gujarat.
Similar practice of payment in instalments was followed by cooperative sugar mills
in Maharashtra and Karnataka prior to FRP regime. The Commission suggests that
a Committee should be constituted under the Department of Food and Public
Distribution to examine feasibility of making payment in instalments, where the
mills should be statutorily required to pay certain proportion of the FRP/RSF within
14 days of supply of cane by the farmers and the remaining amount due before the
end of the sugar season.
Incentivising Sugar Recovery

S.5. Cane growers and sugar mills are economically interdependent and both can
influence the value of output since volume and sugar content of sugarcane is affected
by crop variety, production practices, agro-climatic conditions and technology and
operations of the sugar factory. Therefore, a mechanism for incentivising efficient
mills along with the farmers on every percentage point increase in recovery will
encourage sugar mills to improve manufacturing efficiency and productivity, which
will benefit both farmers and millers. The Commission, therefore, suggests that
a detailed study may be conducted in major producing states to recommend a
mechanism for incentivising sugar mills along with farmers for higher sugar recovery.
2019-20 Sugar Season xv

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Non-Price Policy Recommendations
Diversification of Sugar Industry: Ethanol – An Opportunity
S.6. New National Policy on Biofuels - 2018 has a provision of production of ethanol
directly from sugarcane juice, which provides an opportunity for sugar industry to
diversify. The mills are now allowed to use sugarcane juice and B-heavy molasses in
addition to C-heavy molasses to produce ethanol. The Government has announced
a price of `47.49/litre for ethanol produced from B-heavy molasses and sugarcane
juice, which as per industry estimates is not viable at current FRP of `275 per
quintal. Therefore, the Commission is of the considered opinion that in order to
meet the desired objectives of the policy initiative, a comprehensive study should
be undertaken for fixing remunerative price of ethanol produced from sugarcane
juice and B-heavy molasses. This will also help in reducing import dependency on
crude oil, cleaner environment, financial viability of sugar mills, additional income
to farmers and employment generation in rural areas.
Cane Area Reservation and Minimum Distance Criterion

S.7. Cane area reservation and minimum radial distance criterion under the Sugarcane
Control Order restrict competition among sugar mills and reduce bargaining power
of cane growers. The Commission, therefore, recommends that in order to increase
competition among mills and ensure competitive prices for cane farmers, cane area
reservation and minimum radial needs to be phased out and market-based long-
term contractual arrangements should be encouraged.
Crop Diversification and Intercropping

S.8. Excess production over consumption has led to depressed sugar prices and thus to
sustain income of farmers, there is a need for crop diversification and inter-cropping
offers a unique potential for increasing returns to farmers along with addressing
the issue of loss of soil nutrients. For instance, sugarcane depletes a considerable
amount of soil nutrients but intercropping with pulses and soybean can help in
increasing productivity per unit area of land, efficient utilization of nutrients,
improving soil fertility and reducing cost of production. Therefore, efforts should be
made to promote intercropping in sugarcane cultivation.
Mechanisation of Sugarcane Cultivation

S.9. Mechanization of sugarcane production, from soil preparation and planting to
harvesting, is key to improve its competitiveness as sugarcane is labour-intensive
crop. Some progress has been made in mechanization of planting and harvesting
operations in few states but more needs to be done. However, some issues such as
higher trash content, weight loss and quality deterioration in mechanized harvesting
have cropped up. Hence, there is a need to develop and promote appropriate
machinery and other technologies particularly for planting and harvesting of
sugarcane.
xvi 2019-20 Sugar Season

Chapter
1
Overview
Introduction
1.1 Sugarcane is an important cash crop in India with about 3.7 percent share in net
area sown and contributed about 4.2 percent (` 53,647 crores at constant (2011-
12) prices) to the value of output from crop sector in TE2016-17. India is the second
Chapter 1
largest producer of sugarcane and sugar but the largest consumer in the world. As
on 30th June 2018, there were 732 sugar mills in the country (326 in co-operative,
44 in public and 362 in private sector), out of which 524 mills were in operation.
The share of closed mills was the highest (77.27 percent) in public sector, followed
by cooperatives (31.6 percent) and private sector (19.61 percent).
Production and Consumption

1.2 Sugarcane production in the country increased to 355 million tonnes in 2017-18, up
49 million tonnes, or 16 percent, from 2016-17. Production is expected to increase
further in 2018-19 due to anticipated increase in acreage and favourable weather
conditions. The area under sugarcane also increased to 4.77 million hectares in
2017-18, an increase of 7.64 percent over last year.
1.3 As per third advance estimates, Uttar Pradesh is the largest producer (162.34 million
tonnes) of sugarcane in the country, followed by Maharashtra (72.64 million tonnes)
and Karnataka (29.90 million tonnes). The major increase in sugarcane production
has been witnessed in Maharashtra, where production increased by 43.6 percent
in 2017-18 over last year, mainly driven by area expansion (42.5 percent). It is to be
noted that Maharashtra recorded a huge shortfall in production (32.6 percent) and
acreage (35.9 percent) in 2016-17 over 2015-16 due to deficient rainfall. State-wise
area, production and yield of sugarcane during 2007-08 to 2017-18 are given in
Annex Table 1.1.
1.4 Sugar production in India reached a record level of 32.2 million tonnes in 2017-
18, 58.2 percent increase over 2016-17 season, and an all-time high. Favourable
2019-20 Sugar Season 1

Price Policy
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weather conditions, along with expanding acreage due to better returns relative
to competing crops and high sugar recovery particularly in Uttar Pradesh, have
led to higher production in 2017-18. Till recently, Maharashtra was the largest
producer of sugar in the country due to higher cane yield and sugar recovery but
with introduction of a new improved high yielding variety of sugarcane Co 0238 in
Uttar Pradesh, the state has become the largest producer of sugarcane as well as
sugar.
1.5 Consumption of sugar has increased steadily over the years, averaging about 1.7
percent per year over the last 10 years (2008-09 to 2017-18). Sugar consumption
increased marginally in 2017-18 and was 25 million tonnes, creating a surplus
of 6.9 million tonnes, the highest since 2006-07 (Chart 1.1). This excess supply
over demand for sugar has created a downward pressure on prices of sugar in the
country. It is quite evident from Chart 1.1 that sugar consumption has grown
steadily over the years but production has been very erratic. Instability in sugar
production measured by the coefficient of variation was much higher (24.4 percent)
compared with consumption (14.1 percent) during 2001-02 to 2017-18. The state-
wise production of sugar is given in Annex Table 1.2.
Chart 1.1: Production and Consumption of Sugar, 2001-02 to 2017-18
Overview
Source: Directorate of Sugar (DFPD)
1.6 As per USDA, global sugar production is projected to be lower by 4 million tonnes
to 188 million tonnes in 2018-19 due to lower production in Brazil, Pakistan and
the European Union, enough to offset record production in India and Thailand.
Global consumption is also forecast to increase and stocks continue a steady
upward trend. USDA forecasts a record production of sugar (33.8 million tonnes)
in India in 2018-19. Thailand is expected to expand sugar production to a record
14.1 million tonnes due to higher area in 2018-19 while its consumption will go
2 2019-20 Sugar Season

Price Policy
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down due to lower industrial demand in response to a new sugar excise tax on
beverages. Reduced production of sugar in Brazil is expected mainly due to the
diversion of more sugarcane towards ethanol production, which will result in fall in
Brazil’s exports. Sugar production in European Union is also expected to fall and will
result in decrease in exports.
Pricing of Sugarcane
1.7 The Governments of Bihar, Haryana, Punjab, Uttarakhand and Uttar Pradesh
announce State Advised Price (SAP), much higher than the FRP, hence making it
difficult for sugar mills to pay to farmers. The SAP is neither decided scientifically
nor linked to sugar recovery, and therefore, does not promote efficiency. This
distortionary policy has resulted in mounting cane price arrears to farmers and
weak financial health of sugar mills. More so, increased production has created
a situation of excess supply over demand leading to low prices of sugar. The
Commission recommends that announcement of SAP by the States should be
stopped immediately as it does not incentivise efficiency and also creates distortions
in the market. FRP and SAP paid by major producing states are given in Annex Table
1.3.
Overview
1.8 In 2017-18, there has been an unprecedented increase in sugarcane arrears as a
result of increased production and low prices of sugar in both domestic and global
markets. The cumulative cane price arrears for 2017-18 are given in Table 1.1. Total
cane price arrears were ` 17,684 crore on July 18, 2018 and Uttar Pradesh alone
accounts for nearly two-third of total cane arrears. SAP-states account for more
than 80 percent of total arrears.
Table 1.1: State-wise Details of Cane Price Arrears during 2017-18
Arrears Arrears
State State
(` Crore) (` Crore)
1. Uttar Pradesh 11,618 2. Maharashtra 1,158
3. Karnataka 1,046 4. Punjab 788

5. Haryana 693 6. Bihar 619
7. Uttarakhand 612 8. Gujarat 601
9. Tamil Nadu 187 10. Telangana 109

11. Others 253 All-India 17,684
1.9 In order to provide relief and address the problems of farmers and sugar mills,
Government of India has been intervening and providing financial assistance in
different forms since 2014-15. For example, in order to clear cane price arrears
in 2014-15 (` 21,837 crore on April 15, 2015), the Central Government had taken

Price Policy
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Sugarcane
several steps such as soft loans, interest subvention, export incentives, production
subsidy of ` 4.50 per quintal of cane crushed, fixing remunerative price, waving
off excise duty on supply of ethanol, etc. A similar situation has arisen during the
current season due to a record production of sugar. High production during the
current sugar season and an anticipation of higher production in 2018-19 have
resulted in sharp fall in sugar prices. The liquidity position of sugar mills has also
been adversely affected, leading to accumulation of cane price arrears. With a view
to improve the liquidity position of mills, thereby enabling them to clear the cane
price arrears of farmers, Central Government has taken several initiatives. Import
duty on sugar was increased from 50 percent to 100 percent in February, 2018 to
restrict imports and stock holding limits were imposed on producers of sugar for
the months of February and March 2018 to stabilize domestic sugar prices. Customs
duty on export of sugar was withdrawn, mill-wise Minimum Indicative Export Quotas
(MIEQ) of 2 million tonnes of sugar for export has been allotted during sugar season
2017-18 which has been extended till December 2018 and allowed Duty Free Import
Authorization (DFIA) Scheme in respect of sugar to facilitate and incentivize export
of surplus sugar by sugar mills. Other interventions include, (a) assistance of `5.50
per quintal of cane crushed to offset the cost of cane amounting to `1540 crores,
(b) creation of buffer stock of 3 million tonnes with the assurance to reimburse
Overview
carrying cost of `1175 crores towards its maintenance and (c) soft loans of `4,440
crore through banks for setting up new distilleries and installation of incineration
boilers to augment ethanol production capacity for which Government will bear
interest subvention cost of `1,332 crore. The Government also fixed minimum
selling price of white/refined sugar at `29 per kg for sale at mill gate in domestic
market. As a result of these measures, ex-mill prices of sugar have improved and
resulted in reduction in cane price arrears, from ` 23,232 crores in May, 2018
to ` 17,684 crores on 18.07.2018. However, this calls for the establishment of a
permanent mechanism for addressing such situations.
Payment to Sugarcane Growers

1.12 There is a provision in the Sugarcane Control Order (SCO) that payment by the mills
should be made to farmers within 14 days from the date of delivery of sugarcane
to the mills, failing which mill shall pay interest on the amount due at the rate of
15 percent per annum for the period of such delay beyond 14 days. During the
interactions, which the Commission had with various stakeholders, it was reported
that sugar mills are unable to pay farmers within 14 days, because they generate
revenue from the sale of sugar after few weeks/months. Mills take loans from banks
to make the cane payments to farmers, which increases their costs. The industry
has requested to explore feasibility of payment to farmers in instalments as is a
practice in Gujarat. Similar practice of cane payment in instalments was followed by
cooperative sugar mills in Maharashtra and Karnataka prior to FRP regime. The CACP
suggests that a committee should be constituted under the Department of Food
and Public Distribution to examine feasibility of making payment in instalments,
where the mills should be statutorily required to pay certain proportion of the FRP
within 14 days of supply of cane by the farmers and the remaining amount before
the end of the sugar season.

Price Policy
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Sugarcane
1.13 The future viability and sustainability of sugar industry has been questioned
and it is generally agreed that industry will have to focus on diversification and
value addition. Recently, the Government under new National Policy on Biofuels
- 2018 has permitted production of ethanol directly from sugarcane juice, which
provides an opportunity for sugar industry to diversify. Now, the mills are allowed
to use sugarcane juice and B-heavy molasses in addition to C-heavy molasses to
produce ethanol. Government has fixed the ex-mill price of ethanol derived out of
C-heavy molasses at `43.70 per litre and `47.49 per litre from B-heavy molasses
and sugarcane juice excluding GST and transportation charges for the sugar season
2018-19 during ethanol supply period from 1st December 2018 to 30th November
2019.
1.14 Since the Government has allowed production of ethanol directly from B-heavy
molasses and sugarcane juice and extended soft loans with interest subvention to
mills for setting up new distilleries and installation of incineration boilers to augment
ethanol production capacity, industry is expected to expand production capacity. In
2016-17, total ethanol supplied was 665.1 million litres. Total allocation for 2017-18
Overview
fixed at 1581.5 million litres of which 869.2 million litres have already been supplied
so far, which has increased over the last year by 30.7 percent . However only
about 55 percent of the allocation has been supplied and there is a huge gap to be
bridged. During Commission’s interaction with various stakeholders including sugar
industry, it was highlighted that the price announced by the Government for ethanol
produced from B-heavy molasses and sugarcane juice (` 47.49/litre) is not viable at
current FRP of `275 per quintal. The Commission had requested the states and mills
to provide data on cost of production of ethanol from B-heavy molasses/sugarcane
juice but data was not made available. Therefore, the Commission suggests that
in order to meet the desired objectives of the policy initiative, a comprehensive
study should be undertaken for fixing remunerative price of ethanol produced
from B-heavy molasses and sugarcane juice. This will also help in reducing import
dependency on crude oil, cleaner environment, financial viability of sugar mills,
additional income to farmers and employment generation in rural areas.
Incentivising Efficiency: Benefit Sharing between Farmers and Mills

1.15 The sugar recovery of sugarcane depends on crop variety, climatic conditions and
technological interventions (crushing efficiency of mills). A comparative analysis
of sugar recovery in Uttar Pradesh reveals that recovery rate is significantly high
in private mills (10.96 percent) compared with cooperative sector (9.73 percent).
However, there are large intra-regional differences in sugar recovery rates, which
can be attributed mainly to technological efficiency of sugar mills as agro-climatic
conditions and crop varieties grown in a region will be almost similar. For example,
out of 18 sugar mills in Lucknow region, 5 mills had sugar recovery below 10 percent
(lowest being 8.67 percent in Sampurnanagar cooperative mill in Lakhimpur Kheri
district) while remaining 13 had recovery rate of more than 10 percent (11.77
percent in Balrampur Chini Mill in Lakhimpur Kheri district), which reflects crushing

Price Policy
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efficiency of mills. Almost a similar situation was observed in other regions of Uttar
Pradesh and Maharashtra (Annex Tables 1.4 and 1.5). Therefore, a mechanism
for incentivising efficient mills along with the farmers on every percentage point
increase in recovery may be evolved. This will encourage sugar mills to improve
manufacturing efficiency and productivity, which will benefit both farmers and
millers. The Commission, therefore, suggests that a detailed study may be conducted
in major producing states to recommend a mechanism for incentivising sugar mills
along with farmers for better sugar recovery.

1.16 The huge increase in sugar production and a steady demand for sugar has led to
depressed market prices thereby resulting in high sugar surpluses and cane price
arrears. There is a need to reduce area under sugarcane cultivation, which is water-
intensive crop. One of the alternatives could be to promote wider spacing planting
of sugarcane and intercropping of oilseeds, pulses and vegetables, which will help
in reducing sugarcane acreage, improving soil productivity and enhancing farmers’
income. Several studies have demonstrated that intercropping helps increasing
returns to farmers along with addressing the issue of loss of soil nutrients. For
Overview
instance, sugarcane crop depletes a considerable amount of nutrients from soil but
soybean and pulses as intercrops can help in increasing productivity per unit area
of land, improve soil fertility and reduce cost of production. According to ICAR-
Sugarcane Breeding Institute, an additional income of ` 31,771 per ha from black
gram as intercrop with sugarcane, ` 22,082 from green gram, ` 68,696 from soybean
and ` 41,337 from coriander can be generated. Therefore, efforts should be made
to promote intercropping in sugarcane cultivation.

1.17 Since sugarcane cultivation is labour-intensive in India, mechanization of sugarcane
production is an inevitable choice to reduce labour requirement and cost of
cultivation. Mechanization of sugarcane production from soil preparation and
planting to harvesting is key to improving its competitiveness. Some progress has
been made in mechanization of planting and harvesting operations in few states but
some issues have cropped up. For example, according to a study by S Nijalingappa
Sugar Institute, Belagavi, Karnataka in 2017, it was reported that in mechanised
harvesting, trash content was much higher and there was weight loss to the extent
of 9.8 percent as well as quality deterioration. The comparative analysis of losses
in different varieties of sugarcane due to mechanical harvesting vis-à-vis manual
harvesting is presented in Annex Table 1.6. Therefore, there is a need to develop and
promote appropriate machinery and other mechanization technologies particularly
for planting, inter-cultural operations and harvesting of sugarcane.

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Sugarcane
Structure of the Report
1.18 Chapter 2 of the report analyses the demand-supply situation of sugar and the
pricing policy for cane. Growth in productivity and capacity utilization of mills
is presented in Chapter 3. Chapter 4 provides an overview of trade patterns,
domestic and international prices and trade policy with a view to improve global
competitiveness of Indian sugar sector. Chapter 5 analyses costs and returns of
sugarcane and discusses inter-crop price parity issue. Finally, major highlights of
all the Chapters leading to key price and non-price policy recommendations are
presented in Chapter 6.
****
Overview

Chapter
2
Demand-Supply and Pricing Policy

2.1. Sugar is an important global trading commodity as nearly one-third of total
Chapter-2
production is traded in the world market. Brazil, India, China, Thailand, the United
States, Pakistan, Russian Federation, Mexico and Australia are major producers,
while Brazil, Thailand and Australia are main exporters of sugar. Production of sugar
in India has witnessed significant growth with substantial cyclical fluctuations,
while demand has increased steadily with rising population and income. Sugarcane
production, which significantly declined during 2014-15 and 2015-16, increased
to 355 million tonnes in 2017-18, about 16 percent increase, due to increase in
production in all major producing states except Tamil Nadu. As a result, production
of sugar increased from 20.2 million tonnes in 2016-17 to 32.1 million tonnes in
2017-18. Sugar production increased in all the States in 2017-18 except Tamil Nadu,
where sugar production declined by about 49 percent in 2017-18 over 2016-17.
2.2. Chart 2.1 shows the changing shares of major states in total sugarcane production
between TE2007-08 and TE2017-18. The share of Uttar Pradesh in total production
has increased from 39 percent in TE2007-08 to 44.4 percent in TE2017-18 while
the share of Maharashtra has declined from 20.9 percent in TE2007-08 to 19.7
percent in TE2017-18. Production share of Tamil Nadu has declined sharply from
11.6 percent in TE2007-08 to 6 percent in TE2017-18. Karnataka and Gujarat, other
main producers of sugarcane, have also lost their share during this period.

Price Policy
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Sugarcane
Chart 2.1: Share of Major Producers in Sugarcane Production

Source: DES
2.3. Uttar Pradesh surpassed Maharashtra in sugar production and became the
largest producer of sugar in 2016-17 and maintained its position in 2017-18. This
is primarily due to the spread of Co 0238, high yielding and high sugar content
early-maturing variety, which has resulted in significant increase in cane yield and
sugar recovery in the state. Chart 2.2 shows the changing shares of major states in
total sugar production between TE2007-08 and TE2017-18. Uttar Pradesh has the
largest share (35.6 percent), followed by Maharashtra (30.4 percent) and Karnataka
(12.7 percent). Uttar Pradesh and Karnataka have increased their share in total
sugar production between TE2007-08 and TE2017-18. Top three producers namely,
Uttar Pradesh, Maharashtra and Karnataka contributed 70.5 percent in 2007-08,
which increased to 78.7 percent in TE2017-18. This is mainly due to significant
improvement in sugar recovery in the recent years.
Chart 2.2: Share of Major Producers in Sugar Production

Price Policy
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Sugarcane
Stock-to-Use Ratio
2.4. The stock-to-use ratio (SUR) in the country declined from 29.2 percent in 2015-16
to 16.1 percent in 2016-17, due to a sharp fall in the production of sugar in 2016-17
(Table 2.1). Subsequently in 2017-18, the SUR sharply rose to 43.5 percent, mainly
due to 58.8 percent increase in sugar production. The estimated closing stock for
the year 2017-18 is projected to be about 11 million tonnes, the highest in last
7 years. Hence, appropriate stock management and trade policy is required for
disposal of excess stocks to address the issue of low market prices.
Table 2.1: Stock to Use Ratio of Sugar (Sugar Season: October to September)
(lakh tonne)
Particulars 2014-15 2015-16 2016-17 2017-18#

Carry- over Stocks with Sugar Mills from
72.1 90.0* 77.1 39.4
Previous Season
Net Opening Stock 72.1 90.0 77.1 39.4
Production of Sugar 284.6 251.2 202.3 321.2
Imports - - 5.0 2.5
Estimated Total Availability 356.8 341.2 284.4 363.1
Estimated Releases/Dispatches for Internal
256.0 247.6 245.0 250.0
Consumption
Exports against ALS/AAS Obligation and OGL 12.0 16.5 0.0 3.0
Total Estimated Releases 268.0 264.1 245.0 253.0
Estimated Closing Stocks with Sugar Mills at
88.8 77.1 39.4 110.1
the End of Season
Stock to Use Ratio 33.1 29.2 16.1 43.5
Note: *Opening balance in 2015-16 is different from closing balance of 2014-15 to account for damaged/
wet sugar and sugar sold under court orders.
# Provisional data on consumption, import and export
Source: Directorate of Sugar, DFPD
2.5. Table 2.2 shows the world balance sheet for sugar from 2014-15 to 2018-19. Ending
stocks are key indicators of the availability of commodity in market and likely
price direction for the commodity. It is evident from the table that there are large
variations in the ending stock positions reported by FAO and USDA. As per FAO,
world stocks-to-use ratio increased from 52.1 percent in 2015-16 to 54.8 percent in
2016-17 and anticipated to be the largest (57.3 percent) in history. USDA estimates
also show an increase in ending stocks in 2017-18 and forecast to decline marginally
(27.7 percent) in 2018-19.

Price Policy
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Sugarcane
Table 2.2: World Sugar Balance Sheet
(Million tonnes)
FAO * USDA **
Year
Prod. Cons. Ending Stocks Prod. Cons. Ending Stocks
2014-15 - - - 177.4 167.9 48.8 (29.1)
2015-16 169.6 167.8 87.4 (52.1) 164.7 169.4 43.9 (25.9)

2016-17 168.9 166.8 91.3 (54.6) 173.9 170.7 41.9 (24.5)
2017-18 187.6 170.6 97.7 (57.3) 191.8 174.1 49.5 (28.4)
2018-19 - - - 188.3 177.6 49.2 (27.7)
Note: Figures in parentheses show ending stock as percentage of consumption.
* FAO figures for 2016-17 are estimates and 2017-18 are forecast.
** USDA figures for 2017-18 are estimates and 2018-19 are forecasts
Domestic Price Trends

2.6. Average ex-mill prices of sugar in India are presented in Chart 2.3. Prices of sugar
recovered in 2015-16 (`3122 per qtl) and 2016-17 (`3609 per qtl) after recording a
low of `2447 per quintal in 2014-15 but again witnessed a significant fall (`3183/
quintal) in 2017-18 (Chart 2.3). Among major producing States, generally lowest
ex-mill price has been observed in Maharashtra, while prices are generally high in
Uttar Pradesh. The state-wise details of ex-mill sugar price are given in Annex Table
2.1.
Chart 2.3: Trends in Average ex-Mill Prices of Sugar in Major Producing States
Note: *ex-mill price up to June 2018

Source: Directorate of Sugar

Price Policy
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Sugarcane
2.7. Month-wise domestic wholesale and retail prices of sugar since August, 2016 are
shown in Chart 2.4. The prices of sugar increased during January, 2017 to November,
2017 mainly due to decline in sugar production in 2016-17 but witnessed a sharp
decline since the beginning of the new crushing season in 2017-18, in anticipation
of higher production estimates during current and next sugar season. However,
after certain Government interventions like minimum sale price, hike in import
duty, creation of buffer stocks, etc. the prices recovered in June-July 2018.
2.8. As per USDA estimates, global stocks for Marketing Year 2018-19 are forecast to
be high due to higher global production led by mainly India and Thailand. Similarly,
domestic stocks are also likely to be high. Hence, there is a possibility of decline in
global prices during Marketing Year 2018-19, which has implications for domestic
prices in the country.
Chart 2.4: Domestic Wholesale and Retail Price of Sugar
Source: DFPD
State Advised Price (SAP): Distortionary Policy

2.9. The State Advised Price (SAP) fixed by some States is higher than the FRP announced
by the Central Government and create distortions in the market. When sugar
prices are low, sugar mills are unable to pay high SAPs to the farmers resulting
in huge cane arrears. Hence, the Commission recommends that FRP/RSF must be
implemented in all states and announcement of SAP by states should be stopped
immediately. In case, where the state governments decide to continue with SAP, the
difference between SAP and FRP should be paid by the state government directly to
farmers.

Price Policy
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Sugarcane
2.10. As per Rangarajan Committee recommendations, the farmers must be paid the
cane price as per RSF i.e. farmers should be paid FRP, a minimum guaranteed price
as first instalment, and share in revenue (70 per cent) generated from sugar and
each of primary by-products or 75 percent of revenue generated from sugar alone
as the second instalment. However, when the sugar prices are low and FRP is higher
than RSF payment, it would be difficult for the mills to pay the FRP. The Commission
had recommended in its earlier reports, creation of Price Stabilisation Fund (PSF)
to pay the difference between RSF payment and FRP during the years of depressed
sugar prices. However, the same could not be implemented due to non-availability

of funds/source of funds. The issue of generating such extra funds during years
when sugar prices are very low needs to be worked out by an Expert Committee so
that the farmers can be paid their dues in time.
2.11. One of the options to generate funds for PSF could be to impose sugar tax on
soft drinks/beverages as has been done in many developed countries and some
developing countries in the recent years. The tax will raise revenue to support
PSF. In addition, during high prices of sugar and by-products, part of surplus
generated under RSF can be retained and deposited in the PSF. Discontinuation
of levy sugar obligation on mills has reduced financial burden on sugar industry,
therefore, industry should also contribute towards the PSF. Dual pricing of sugar
for bulk consumers and household sector can help in creating PSF and improving
financial health of sugar mills as well as benefit sugarcane farmers. The Commission
recommends that a Committee should be constituted to explore possibilities of
creating and managing PSF.
2.12. An analysis of cane payments to farmers under FRP and RSF clearly shows that
farmers will get additional payment and benefit from RSF over a period of time
(Table 2.3). For example, had RSF been implemented farmers would have received
an additional payment of `23,117 crores during 2010-11 to 2017-18. However,
during 2013-14 to 2015-16 and 2017-18, when FRP was higher than RSF payment,
mills were unable to make payment of cane dues to farmers. During such periods,
minimum sale price of sugar can be fixed in the short run to enable the mills to pay
to farmers. Reliable and timely availability of data on ex-mill price of sugar and its
by-products is a pre-requisite for successful implementation of RSF. The Commission
reiterates its recommendation that Directorate of Sugar & Vegetable Oils, Ministry
of Consumer Affairs, Food & Public Distribution should regularly collect state-wise
ex-mill prices of sugar and its by-products. However, during the discussion with
sugar industry, it was pointed out that the minimum selling price for sale of sugar
at factory gate (` 29/kg) is not sufficient to cover the cost of sugar at current FRP.
The Commission suggests that a transparent and scientific mechanism for deciding
minimum selling price be evolved.

Price Policy
for
Sugarcane
Table 2.3: FRP and RSF payable during 2010-11 to 2017-18
Year Weighted Weighted Weighted Weighted Cane Cane price Cane Excess
Average Ex- Average Average RSF Average crushed payable price price
mill sugar Sugar per ton of sug- FRP per (lac as per RSF payable payable
price per Recovery arcane @ 75% ton of tons) with re- as per as per
ton Rate (%) of revenue re- sugarcane covery rate FRP RSF over
(`) alised on sugar as per 9.5% in (` crore) FRP
with recovery average case where (` crore)
rate 9.5% and recovery recovery (7)-(8)

>9.5% (`) <9.5%
(`) (` crore)
2010-11 26,631 10.19 2,005 1,485 2,390 49,417 36,204 13,213
2011-12 29,507 10.27 2,240 1,567 2,534 58,592 40,377 18,215
2012-13 30,942 10.05 2,301 1,802 2,481 58,978 45,458 13,520
2013-14 28,911 10.27 2,200 2,252 2,374 53,591 54,588 -997
2014-15 24,271 10.45 1,867 2,374 2,684 51,520 65,483 -13,963
2015-16 31,125 10.50 2,447 2,536 2,368 58,438 60,603 -2,165
2016-17 36,079 10.25 2,760 2,487 1,897 52,800 47,402 5,398
2017-18 31,859 10.73 2,506 2,844 2,963 75,483 85,587 -10,104
Total 23,117
Source: CACP calculations using data from Directorate of Sugar (DFPD)
2.13. The Commission has analysed the dues payable and paid to the farmers as per SAP
and FRP in Uttar Pradesh during 2017-18 (Table 2.4). It is observed from the Table
that difference between dues payable as per SAP and FRP is about ` 3103 crore.
About 74.3 percent of total payment on the basis of FRP has been made by sugar
mills which clearly show the mills have not been able to make full payment of FRP
dues. SAP has added more burden on the sugar mills, leading to much higher cane
arrears. Since, the difference between SAP and FRP has narrowed considerably in
UP during last few years (Chart 2.5), the state government should shift to FRP. Some
state governments are already paying directly or indirectly from the state budgets
to farmers. For example, Uttar Pradesh government paid `1060 crores in 2013-14
and `2979 crores in 2014-15 in the form of exemption of purchase tax, relaxation in
society commission, additional direct payment to farmers account, etc. Hence, the
Commission is of the considered opinion that in case, where the state governments
decide to continue with SAP, the difference between SAP and FRP should be paid
by the state government directly to farmers and mandatory payment to farmers
within stipulated time should be enforced on the mills.

Price Policy
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Sugarcane
Chart 2.5: FRP and SAP in UP during 2010-11 to 2018-19

Table 2.4: Total Dues as per SAP & FRP in Uttar Pradesh (` crore)
Dues Payable based Dues Balance Dues (%) Paid

on Payment based on
Sector based on
Made
SAP FRP SAP FRP FRP
Co-operative 3059 2506 1857 1202 648 75.1
Corporation 148 119 104 44 16 87.1
Private 32241 29720 22076 10165 7644 74.3
State Total 35448 32345 24037 11411 8308 74.3
Cane Area Reservation and Minimum Distance Criteria

2.14. Government of India delegated the power of reserving the cane area in July,
1966, as per Sugarcane (Control) Order, 1966, Provision No.6 - power to regulate
distribution and movement of sugarcane. The Committee headed by Dr. C.
Rangarajan on de-regulation of sugar sector had recommended that states should
encourage development of market-based long-term contractual arrangements and
phase out cane reservation area and bonding over a period of time. The Central
Government had requested the States to consider the recommendation as deemed
fit. Maharashtra is the only state which has no reservation of cane area and
farmers are free to sell to any mill. The issue has been discussed at length with the
various States but Andhra Pradesh, Bihar, Haryana, Karnataka, Punjab, Telangana,
Uttarakhand, Uttar Pradesh, which have cane area reservation, have suggested
continuing with the reservation criteria for sugar factories. However, Commission
is of the considered view that the cane area reservation should be dispensed with
and farmers should be free to supply cane to the mill of their choice, which makes
higher and timely payment within stipulated time frame.

Price Policy
for
Sugarcane
Sugar Recovery from Sugarcane
2.15. Amount of sugar extracted from sugarcane depends on various factors such as
genetic potential, agro-climatic conditions, management practices including cane
supply arrangements and processing efficiency of mills. A higher recovery rate
improves the overall financial position of the sugar mill and helps in timely payment
and remunerative prices to sugarcane growers. Chart 2.6 shows all-India sugarcane
yields along with the sugar recovery and sugar yield for the period 2008-09 to 2017-
18. It can be observed that, out of the 10 years, cane yield declined in 4 years
while recorded a fall in 3 years (2010-11, 2012-13 and 2016-17). Sugar recovery rate
witnessed the steepest increase in 2017-18, from 10.25 percent in 2016-17 to 10.73
percent in 2017-18.
Chart 2.6: All- India Cane Productivity, Sugar Productivity and Sugar
Recovery 2008-09 to 2017-18
Source: DES, Ministry of Agriculture and Farmers Welfare
2.16. The existing system of FRP incentivizes efficiency in terms of additional payment for
higher sugar recovery but it does not disincentivize inefficiency for lower recovery.
Cane and sugar yields for major producing states in TE2017-18 are given in charts
2.7 (a) and (b). Six out of 9 major cane growing states have average cane yield
higher than all-India average. Bihar has the lowest cane and sugar yield while Tamil
Nadu has the highest cane yield and Maharashtra has the highest sugar yield. It
may also be noted that, although, introduction of Co0238, a high yielding and high
sugar content variety has resulted in significant increase in sugar recovery rate in
Uttar Pradesh but state average sugar yield (71.9 qtl/ ha) still remains below all-
India average (74.8 qtl/ ha). This is mainly due to low cane yield in Uttar Pradesh
(68.2 tonnes/ ha). In case of Tamil Nadu, although sugarcane yield is the highest
(92.1 tonnes/ ha) but due to low sugar recovery rate (8.53 percent), sugar yield is
78.5 qtl/ha, which is third highest at all-India level. Recognising the problem of low
sugar recovery in the state, Govt of Tamil Nadu has recently launched a project on

Price Policy
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Sugarcane
“Varietal Testing in Public/Cooperative Sugar Mills of Tamil Nadu” in collaboration
with ICAR-Sugarcane Breeding Institute.
2.17. The Commission feels that inefficieny should be disincentivised and recommends
that FRP should be discounted proportionately for every 0.1 percentage point
recovery below 9.5 percent during sugar season 2019-20 and below 10 percent
in subsequent years. This would help sugar mills, cane growers and research and
development organisations to improve cane yield and sugar recovery. State-wise
recovery rates are given in Annex Table 2.2.

Chart 2.7: State-wise Cane and Sugar Yield in TE 2017-18
Source: CACP calculations using data from Directorate of Sugar (DFPD) and DES
Recapitulation
2.18. The prices of sugar increased during January, 2017 to November, 2017 mainly
due to decline in sugar production in 2016-17 but witnessed a sharp decline since
the beginning of the new crushing season in 2017-18, in anticipation of higher
production estimates during current and next sugar season. There is a possibility of
decline in global prices during Marketing Year 2018-19, which has implications for
domestic prices in the country. There is a sharp rise in sugar stocks in the country in
2017-18, mainly due to 58.8 percent increase in production of sugar. The estimated
closing stock for the year 2017-18 is projected to be about 11 million tonnes and a
bumper harvest is anticipated in 2018-19. Hence, appropriate stock management
and trade policy is required for disposal of excess stocks to address the issue of low
market prices. For the long term viability of sugar sector, system of State Advised
Price (SAP) should be stopped immediately and move to FRP and adopt RSF over
the period of time as has been done in Maharashtra and Karnataka. When FRP
is higher than the RSF based payment due to low sugar prices, a mechanism for
compensating farmers (difference between FRP and RSF payment) in such years
should be worked out by an Expert Committee. As farmers get incentive for
better sugar recovery, there is a need to disincentivise lower sugar recovery. The
financial health of sugar mills need to be augmented by encouraging/supporting
them to improve their infrastructure and diversify into ethanol production, power
generation and other value-added products.

Chapter
3
Productivity of Sugarcane
3.1 Sugarcane is an important cash crop in India planted on about 4.8 million ha in
Chapter-3
the main production areas in Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu,
Gujarat and Bihar. Currently, the average sugarcane productivity in India is about
74 tonnes per ha. However, productivity can still increase considerably by using
new technologies, improved varieties, recommended package of practices and
better management practices. Considering the importance of sugarcane for Indian
economy, attention needs to be paid to improve cane yield with high sucrose
recovery and reduce cost of production. Since sugarcane is water-intensive crop,
improvement in productivity also provides an opportunity to save a scarce resource
like water.
3.2 Chart 3.1 compares sugarcane yields in major producing countries for triennium
ending 2016 (TE2016). Growth in sugarcane yield in India has been relatively
low, and average yields remain well below yield levels achieved by several other
sugarcane producing countries. The challenge is to increase sugarcane yield on
existing area without competing for fertile land dedicated to food crops and other
uses. A key issue, therefore, is to accelerate the growth rate of yield above the
yield trajectory of the past two decades (< 1 percent) to achieve higher sugarcane
production through higher yields without further expansion of sugarcane acreage.
Achieving higher yields will need efforts to address issues like improved varieties,
small size of land holding, biotic and abiotic stress and unsustainable production
practices along with improvements in technology and management practices. This
chapter deals with analysis of performance of sugarcane productivity at all-India
and state/district level.

Price Policy
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Sugarcane
Chart 3.1: Productivity of Sugarcane in Major Producing Countries in the World
Source: Food and Agriculture Organization (2018)
Productivity Growth Trends
3.3 Chart 3.2 analyses trends in productivity and its variability (measured through
Coefficient of Variation (CV)) for sugarcane. It is evident from the chart that there
has been a steady increase in productivity and a reduction in yield variability since
1950s, except for 2000s which was a decade of falling productivity and increased
variability. However, an area of concern is that the pace of increase in productivity
has slowed during the last three decades (1990s to 2010s).
Chart 3.2: Trends in Productivity and Instability of Sugarcane in India
Source: Computed by CACP from DES, Ministry of Agriculture & Farmers Welfare data
3.4 Table 3.1 presents Compound Annual Growth Rates (CAGR) and instability in
area, production and yield of sugarcane in major states and at all- India level. At
the all-India level, growth in area and production has been declining since 1990s
and has become negative in the current decade (-1.5 percent and -1.0 percent,
respectively). Although, all-India productivity growth has remained positive in
2010s (0.5 percent) but, it has shown a declining trend in comparison to previous
two decades. At the state level, productivity growth became negative in Karnataka
(-2.8 percent), Maharashtra (-0.2 percent) and Tamil Nadu (-3.1 percent) in 2010s
but, Uttar Pradesh registered a significant growth (-0.2 percent in 2000s to 3.1
percent in 2010). As far as area under sugarcane cultivation is concerned, it fell in all
major producing states in 2010s except Bihar (0.6 percent) and Uttar Pradesh (0.1
percent) where there was a marginal rise. The largest decline was observed in Tamil
Nadu (-10.3 percent) followed by Maharashtra (-1.8 percent) and Karnataka (-1.3

Price Policy
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Sugarcane
percent). This is in sharp contrast to 2000s when area under cultivation increased for
all states. A fall in area along with productivity led to a sharp decline in production
in Tamil Nadu (-13.1 percent) in 2010s. Other states showing decline in production
in 2010s were Maharashtra (-4.0 percent), Karnataka (-4.6 percent) and Gujarat
(-1.3 percent). Estimates of CV show that after a period of increased variability in
2000s, area, production and yield of sugarcane at the all-India level showed signs
of stabilization in 2010s. However, among the major states, instability in production
has increased in Uttar Pradesh and Tamil Nadu. While in Uttar Pradesh increased
production variability is largely due to high variability in yields (from 4.2 percent
in 2000s to 7.5 percent in 2010s), for Tamil Nadu instability in production can be
attributed to both area and productivity variations. There is a need to take steps
to reduce variability of production in these states as they account for a significant
share of India’s sugarcane production.

Table 3.1: Compound Annual Growth Rate and Coefficient of Variation of Sugarcane
(Percent)
Compound Annual Growth Rate (CAGR) Coefficient of Variation (CV)

Year/State
1990s 2000s 2010s 1990s 2000s 2010s
Area
Bihar -4.2 5.2 0.6 13.9 35.5 5.4
Gujarat 5.7 0.1 -1.6 17.6 10.6 10.0
Karnataka 3.8 1.3 -1.8 14.5 26.2 8.3
Maharashtra 4.2 8.7 -3.8 16.7 37.6 14.7
Tamil Nadu 3.4 2.7 -10.3 14.3 19.6 23.0
Uttar Pradesh 0.9 0.2 0.1 5.1 4.5 1.7
India 1.9 1.3 -1.5 7.3 10.8 4.5
Production
Bihar -4.4 6.0 4.3 18.2 47.7 12.2
Gujarat 3.4 0.7 -1.3 11.9 8.8 7.8
Karnataka 6.0 3.3 -4.6 23.2 31.3 15.5
Maharashtra 5.4 11.3 -4.0 19.7 43.5 15.4
Tamil Nadu 3.6 4.1 -13.1 15.7 23.4 28.9
Uttar Pradesh 0.9 0.0 3.2 7.8 5.8 8.2
India 2.7 2.3 -1.0 9.4 14.3 5.6
Productivity
Bihar -0.3 0.8 3.6 7.7 9.8 11.4
Gujarat -2.1 0.6 0.4 9.8 4.3 4.8
Karnataka 2.2 1.9 -2.8 9.4 9.0 9.3
Maharashtra 1.2 2.4 -0.2 5.1 11.6 5.0
Tamil Nadu 0.2 1.3 -3.1 3.5 5.7 8.8
Uttar Pradesh 0.0 -0.2 3.1 5.0 4.2 7.5
India 0.8 1.0 0.5 3.8 5.1 2.8
Note: 1990s, 2000s and 2010s refer to period 1991-92 to 2000-01, 2001-02 to 2010-11 and 2011-12 to 2017-
18 respectively.

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3.5 Trends in all-India area, production and productivity of sugarcane during last
10 years are exhibited in Chart 3.3. At the national level, area under sugarcane
witnessed a steady increase during 2009-10 to 2014-15 and declined during 2015-
16 and 2016-17 but again increased in 2017-18. Sugarcane yield has not recorded
any significant improvement. Average yield was around 71 tonnes per ha. However,
in 2017-18 yield has increased to 74 tonnes per ha. Highest production of 362
million tonnes was achieved during 2014-15. However, production fell significantly
during the years of deficient rainfall in 2008-09, 2009-10, 2015-16 and 2016-17.
But, production has bounced back in 2017-18 and reached 355 million tonnes.
Though more than 95 percent of sugarcane is under irrigation but production and
productivity trends clearly indicate that irrigation water available for the crop is only
supplementary and rainfall plays an important role in crop production. Therefore,
there is a need to improve irrigation water use efficiency through micro-irrigation
and better management of irrigation water.
Chart 3.3: All India Area, Production and Productivity of Sugarcane 2008-09 to 2017-18
Source: DES, Ministry of Agriculture & Farmers Welfare
Annual Growth in Area, Production and Productivity

3.6 Annual growth in area under sugarcane, production and productivity of sugarcane
during 2010s is given in Table 3.2. Out of 7 years, growth in production was positive in
4 years and was driven by both area expansion and yield improvements. Sugarcane
production and productivity registered a significant decline in 2012-13, 2015-16 and
2016-17, the years of deficient rainfall. In 2016-17 sugarcane production registered
the largest decline during the current decade. However, highest production growth
rate (16 percent) was achieved during 2017-18. This huge increase has been
accomplished by a combination of improvement in productivity (7.8 percent) and
increase in area (7.6 percent).

Price Policy
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Sugarcane
Table 3.2: Annual Growth Rate of Sugarcane, 2010-11 to 2017-18
(percent)
Year 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Area 3.1 -0.8 -0.1 1.5 -2.8 -10.0 7.6
Production 5.4 -5.5 3.2 2.9 -3.8 -12.2 16.0
Productivity 2.2 -4.8 3.3 1.4 -1.1 -2.4 7.8
District-Level Productivity of Sugarcane

3.7 Sugarcane is cultivated in about 500 districts spread across 26 states but production
is mainly concentrated in about 100 districts. Out of 100 dominant districts top
10 districts account for about 48 percent of total sugarcane production in the
country.
3.8 Table 3.3 compares performance of sugarcane productivity of selected districts in
major producing states for two time periods viz, TE2006-07 and TE2015-16. Districts
contributing at least 1 percent share in total sugarcane production in the State have
been considered for this analysis. Changes in area under different productivity-
bands have been analyzed.
3.9 Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Bihar, Andhra Pradesh and
Punjab, have been included in the analysis. The yield bands considered are <50
tonnes per ha, 50-80 tonnes per ha and >80 tonnes per ha. The analysis shows that,
number of districts and share of area in the highest productivity band (>80 tonnes
per ha) has increased in Maharashtra, Punjab and Bihar (Table 3.3). In case of Uttar
Pradesh, none of the district is in the highest band, however, number of districts
and percentage of area have increased in the productivity band 50-80 tonnes per
ha whereas there is a decline in number of districts and acreage share in the lowest
productivity band (<50 tonnes per ha). In case of Karnataka, though the number of
districts in the highest bracket has gone down, the percentage of area has increased
in this yield band. It is interesting to note that no district in Karnataka is placed in
the lowest band (<50 tonnes per ha). In the case of Tamil Nadu, where average
productivity is high, there is no district in the lowest band of <50 tonnes per ha. The
number of districts as well as share of area has increased in the band of 50-80 tonnes
per ha between TE2006-07 and TE2015-16, while number of districts and share of
area has declined in the highest productivity band during the corresponding period
in the state. This has led to fall in sugarcane yield in Tamil Nadu in recent years. In
case of Bihar, number of districts and percentage of area increased in the middle
productivity band of 50-80 tonnes per ha while one district recorded productivity
of more than 80 tonnes per ha in TE2015-16. In Andhra Pradesh there is a decline
in the number of districts in the highest productivity band while in Punjab the
number of districts and share of area in the highest productivity band has increased
substantially. Increase in the share of area and number of districts in higher yield
bands in major producing states is a positive trend and efforts are needed to further
improve sugarcane yield in states like Uttar Pradesh and Bihar.

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Sugarcane
Table 3.3: District-level Productivity Trends of Sugarcane
<50 tonnes per ha 50-80 tonnes per ha >80 tonnes per ha

States/Year No. of No. of No. of
Area (%) Area (%) Area (%)
districts districts districts
Uttar Pradesh
TE2006-07 1 2.4 20 85.2 - -
TE2015-16 0 0.7 24 88.8 - -
Maharashtra
TE2006-07 0 1.0 11 46.6 5 48.7
TE2015-16 3 9.7 5 21.2 7 63.6
Karnataka*
TE2006-07 - - 3 18.9 9 77.9
TE2015-16 - - 5 26.5 7 66.8
Tamil Nadu
TE2006-07 - - 1 1.9 21 95.3
TE2015-16 - - 1 3.2 18 91.4
Bihar*
TE2006-07 9 91.6 1 1.1 - -
TE2015-16 3 50.0 7 45.7 1 0.5
Andhra Pradesh
TE2006-07 1 11.0 3 31.7 6 56.4
TE2015-16 1 9.0 3 26.7 5 49.8
Punjab*
TE2006-07 1 1.7 14 98.3 - -
TE2015-16 - - 8 80.9 6 18.0
*Data not available for 2004-05 and 2015-16 for Karnataka, 2006-07 for Bihar and Punjab
Source: DES, Ministry of Agriculture & Farmer’s Welfare
Installed Capacity and Capacity Utilisation

3.10 State-wise annual installed capacity and capacity utilization of sugar mills from
2011-12 to 2015-16 are shown in Table 3.4. The table shows that installed capacity
of sugar mills has been increasing over the past 5 years. However, capacity utilization
has remained erratic during the same period. While it reached a peak of 86.4
percent in 2014-15, in 2016-17 it was only 59.8 percent. This dip was largely due to
a fall in sugarcane production in 2016-17. As far as individual states are concerned,
all the major producing states showed a decline in capacity utilization in 2016-17

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except Uttar Pradesh where capacity utilization jumped from 72.3 percent in 2015-
16 to 92.7 percent in 2016-17.
Table 3.4: State-wise Annual Installed Capacity (IC) and Utilized Capacity (UC)
(lakh tones, percent)
2012-13 2013-14 2014-15 2015-16 2016-17

State/Year
IC UC IC UC IC UC IC UC IC UC
Uttar Pradesh 95 79.2 95 69.8 95 75.4 95 72.3 94.7 92.7
Maharashtra 98 81.2 101 76.6 106 99.4 110 77.3 112 37.5
Karnataka 40 85.8 41 100.3 42 117.7 43 94.2 44.9 47.8
Tamil Nadu 29 67.5 29 49.6 29 43.9 29 47.7 28.7 36.9

Gujarat 14 78.3 15 81.1 15 78.0 15 73.8 15.2 57.7
Haryana 6 91.2 6 96.0 6 102.4 6 95.8 5.6 118.9
Punjab 6 76.4 6 82.5 6 93.5 6 117.0 5.7 115.1
Bihar 6 82.6 6 96.6 6 85.2 6 81.5 6.2 85.1
Andhra Pradesh
(including 15 66.2 11 61.0 11 51.1 15 56.1 14.9 33.9
Telangana)
Uttarakhand 5 73.8 5 64.6 5 71.2 5 59.4 4.6 75.1
All India 319 79.0 323 76.0 329 86.4 334 75.2 338.6 59.8
Per Drop More Crop – A Case for Drip Irrigation and Fertigation
3.11 Sugarcane requires 1500 to 2500 mm water and a large quantity of nutrients. The
income of farmers can be increased manifold by an increase in productivity through
advanced irrigation methods. Drip irrigation is one such technology which ensures
high water use efficiency by reducing conveyance loss, evaporation from soil
and continuous maintenance of available soil moisture. On the other hand, drip
fertigation ensures judicious use of fertilizers by enhancing fertilizer use efficiency
and reducing environmental pollution. The drip irrigation and fertigation methods
also result in less weed infestation. Further, they provide option of automation in
irrigation and chemigation thereby reducing the labour requirement. About 40
percent saving in water use and 10-20 percent increase in sugarcane yield can be
achieved by drip irrigation method in comparison to furrow irrigation method.
In view of above advantages in drip irrigation and fertigation, there is a need to
encourage the use of these methods in sugarcane cultivation. States may work in
close collaboration with concerned stakeholders to initiate various incentivization
schemes to achieve the above objectives. For example, interest subvention and
subsidy schemes in Maharashtra and Karnataka, respectively have led to adoption
of improved technologies and practices.

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Sugarcane
Improved Technology and Practices
3.12 ICAR – Sugarcane Breeding Institute is working on a future model of sugarcane
agriculture in the country in order to increase the productivity of sugarcane and sugar
through better varieties and improved cultural practices, reduction in preparatory
tillage and seed costs (multiple ratooning), reduction in input costs (settling
transplanting and drip irrigation/fertigation), increased water and fertilizer use
efficiencies (drip irrigation and fertigation), reduction in labour requirement (wider
row planting and mechanization of cultural operations from planting to harvesting)
and intermittent and additional income to farmers through intercropping.
3.13 The Settling Transplanting Technique (STT) can save seed cane requirement upto
80 percent besides providing healthy plants and good field establishment. It is less
expensive and labour saving when compared to the sett planting. The STT also
reduces the initial water requirement of the crop. The STT in wider row spacing
provides more space and sunlight for a longer duration, increases cane productivity,
and also facilitates intercropping and mechanization of sugarcane agriculture from
transplanting to harvesting.
Recapitulation
3.14 Productivity of sugarcane in the country has increased since 1950s but large scope
exists for improvement of productivity as yield levels in other major producing
countries in the world are much higher as compared to India. This increase
in productivity can be achieved by developing improved varieties, promoting
recommended package of practices, improving water use efficiency through
adoption of drip irrigation and fertigation and promoting farm mechanization. This
will not only help in increasing yields but will also bring down the costs and result
in better returns to farmers.
*****

Chapter
4
Trade Patterns, Competitiveness
and Market Outlook
Chapter-4
4.1 The global sugar market is one of the most distorted agricultural commodity markets
and is generally characterized by number of interventions such as guaranteed
minimum price to producers, production and marketing controls/quotas, tariffs,
import quotas, export subsidies, etc. World sugar trade is largely defined by
preferential trade agreements in which some sugar-producing countries enjoy access
to the high-priced domestic markets of the EU or USA through preferential access.
According to Organisation for Economic Co-operation and Development (OECD)
(2018) estimates, effective prices received by farmers in the OECD countries were
37 percent higher than world prices for sugar. This chapter provides an overview
of main developments in global sugar markets, and analyses trade patterns, price
trends and market outlook.
Global Scenario: Production and Trade

Production
4.2 Approximately 80 percent of world sugar is produced from sugarcane in tropical and
subtropical regions, and the remaining 20 percent is derived from sugar beet, which
is grown mostly in the temperate zones of the northern hemisphere. Developing
countries produce over 82 percent of total global sugar output. Production of sugar
has become increasingly concentrated and top-five major producers account for
about 60 percent of global output.
4.3 As per FAO, Brazil is the largest producer of sugarcane with a share of 37.4 percent,
followed by India (17.6 percent), China (6.1 percent) and Thailand (4.7 percent)
[Chart 4.1]. Sugar beet is an efficient source of sugar production in terms of yield
as well as water use efficiency. Russia is the largest producer of sugar beet with a
share of 15.2 percent followed by France (12.9 percent), USA (11.5 percent) and
Germany (9.5 percent) (Chart 4.2).

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Sugarcane
Chart 4.1: Major Producers of Sugarcane, TE 2016
Trade Patterns, Competitiveness and Market Outlook

Source: FAO
Chart 4.2: Major Producers of Sugar Beet, TE 2016
Source: FAO
4.4 According to OECD-FAO Outlook 2018-2027, production of sugar crops is foreseen

to expand in many parts of the world due to favourable returns per hectare
compared to competing crops. Production of sugarcane is projected to increase
from 1874 million tons in 2015-17 to about 2111 million tonnes in 2027. Increase in
production is projected to come from a combination of yield improvement and area
expansion. Area is forecast to increase from 27.3 million hectares to 29.2 million
hectares and yield from 68.7 tonnes per ha to 72.4 tonnes per ha during 2015-17 to
2027. Sugarcane will remain the main crop to produce sugar (more than 80%) and
sugar beet will contribute less than 20 percent.
4.5 As per USDA, the global sugar production dipped by 7.1 percent in 2015-16 but
increased in next two years, with a growth rate of 5.5 percent in 2016-17 and more
than 10 percent growth in 2017-18. Since 2015-16 onwards global sugar imports
have declined mainly due to lower imports by China. Global Imports declined by

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1.8 percent between 2015-16 and 2017-18. On the demand side, even though
there is decline in sugar prices in global markets but there is not much growth in
consumption especially in high consuming countries, where consumers' preference
towards sugar has changed because of health concerns associated with high sugar
consumption levels. Many developed countries and some developing countries
have introduced a sugar tax on soft drinks to reduce over-consumption of sugar. As
per USDA estimates, the total world production was about 177 million tonnes in TE
2017-18 and Brazil, India, EU and Thailand accounted for 55.4 percent of total sugar
production. Brazil is the largest producer (20.3 percent) and exporter (44.7 percent)
of sugar in the world. India is second largest producer of sugar (16.9 percent) but
a minor player in global trade. Other major producers of sugar in the world are EU
(11 percent), Thailand (7.2 percent) and China (5.3 percent) [Chart 4.3].
4.6 According to OECD-FAO Outlook 2018-2027, growth in world sugar production
is expected to slow down (1.5 percent per annum) during the projection period
compared to 2 percent per annum in the previous decade. Most of the increase in
world sugar production is expected in developing countries. Brazil’s dominance as
the world’s top producer and exporter will be maintained over the outlook period
but its production will continue to be a challenged due to increase in its domestic
ethanol production. Growth in sugar production in developed countries will be much
lower (0.4 percent) compared with developing countries (1.9 percent). However,
production is expected to increase in the European Union with the abolition of
sugar quotas in 2017. The sugar sector in the United States remains heavily
protected through domestic support (the Sugar Loan Program, Sugar Marketing
Allotments, and the Feedstock Flexibility Program) and trade barriers (Tariff Rate
Quotas, Regional Trade Agreements and Export Limits for Mexico). The OECD-FAO
Outlook world sugar projections for 2018-2027 are given in Annex Table 4.1.
Chart 4.3: Major Producers of Sugar, 2017-18
Source: USDA

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Sugarcane
Trade
4.7 Brazil is the largest exporter of sugar in the world with a share of 44.7 percent,

followed by Thailand (15.1 percent), Australia (5.9 percent) and EU (5.9 percent)
[Chart 4.4]. The bulk of exports from Brazil are in raw form and main destinations are
Algeria, Bangladesh and Egypt. Depreciation of Brazilian Real against the US Dollar
could further trigger Brazilian exports. Due to surge in production and reduction of
import tariffs under the existing ASEAN economic community free trade agreement
Thailand is expected to increase its exports. Australia, the third largest exporter
of raw sugar, recently concluded Free Trade Agreement with Peru and has already
signed a similar agreement with the Republic of Korea and is expected to increase
its exports. Similarly, following abolition of sugar quota regime in the EU and the
removal of WTO export limits, exports from the EU are also anticipated to increase.
As per OECD-FAO Agricultural Outlook report, sugar exports are expected to remain
highly concentrated with Brazil and Thailand expanding their exports over the
coming decade.
Chart 4.4: Major Exporters of Sugar, 2017-18
Source: USDA
4.8 Global sugar imports are more dispersed than exports. Indonesia is the major
importer of sugar with a share of 8.3 percent followed by China (7.8 percent), USA
(5.8 percent) and UAE (5.5 percent) [Chart 4.5]. Imports by Asian countries, mainly
India and China, are estimated to fall due to higher domestic production and import
tariffs. Indonesia is expected to remain the largest importer due to higher domestic
use especially by beverages and food processing sectors. Imports by the EU are
forecast to fall significantly due to higher production resulting from abolition of
sugar production quota regime. However, over the next decade, China is expected
to become the leading sugar importer, followed by Indonesia and the United States.
Asia and Africa will record the strongest growth in sugar demand.

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Sugarcane
Chart 4.5: Major Importers of Sugar, 2017-18
Source: USDA
Patterns of India’s Trade in Sugar

4.9 India is currently the 5th largest exporter of sugar in the world with about 3 percent
of global exports. Though India has been generally a net exporter of sugar, it has
also been an occasional net importer of sugar depending upon demand and supply
situation in the country. During the period from 2006-07 to 2016-17, India has been
a net exporter of sugar except in 2009-10 when it became a net importer. India’s
exports of sugar were the highest in 2007-08 (46.8 lakh tonnes) and lowest in 2009-
10 (40 thousand tonnes) [Chart 4.6] whereas, imports of sugar were the highest
in 2009-10 (25.5 lakh tonnes) and lowest in 2007-08 [Chart 4.7]. India became a
net importer of sugar in 2017-18 due to extant export duty and low import duty
regime. Given the present situation of surplus domestic production and supply of
sugar in 2017-18, it is important to find ways and means to increase sugar exports,
especially to neighbouring countries to boost low domestic prices of sugar.
4.10 The major export destinations for India in 2017-18 were Sudan (24.7 percent),
Somalia (15.9 percent), UAE (11.5 percent), Myanmar (8.3 percent), Bangladesh (4.3
percent), Saudi Arabia (4.0 percent) and Kenya (3.9 percent). Exports to Sudan have
more than doubled than previous year, while exports to Myanmar have declined
significantly, from 33 percent in 2016-17 to 8.3 percent in 2017-18. Exports to UAE,
Somalia and Bangladesh have also increased in 2017-18 compared to 2016-17.
4.11 Imports of sugar witnessed a steady increase during 2013-14 and 2017-18. India
imported 24 million tonnes of sugar in 2017-18 despite having the record production
in the current season. About 98.5 percent of India’s sugar imports were from Brazil
in 2017-18. India imported very small quantities of sugar from Pakistan, UAE,
Germany, USA and Italy during 2017-18. Top ten export destinations for Indian
sugar and import sources are given in Annex Table 4.2 and 4.3.

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Sugarcane
Chart 4.6: Trends in India’s Exports of Sugar, 2006-07 to 2017-18

Source: DGCIS
Chart 4.7: Trends in India’s Imports of Sugar, 2006-07 to 2017-18
Source: DGCIS
Competitiveness of Indian Sugar

Domestic and World Price Dynamics
4.12 As discussed earlier, world sugar market is one of the most highly distorted markets
due to interventions like domestic support programmes, production and marketing
controls and other trade distorting policies. These interventions have kept domestic
prices in many countries artificially high in comparison to the world markets. It is
evident from Chart 4.8 that domestic prices of sugar in the US have been significantly
higher than international prices. Similarly, EU prices have also remained stable and
unrelated to highly volatile world market prices. Trade distortions in international

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sugar markets that create additional sources of uncertainty are not likely to disappear
in the near future in the price dynamics of world sugar markets. Also, changes in
international sugar prices are not fully transmitted to domestic sugar producers
and consumers, even some sugar markets have undergone several reforms and
structural changes such as elimination of sugar quotas and price controls in Thailand
and European Union.
4.13 In order to protect their domestic markets, many countries use trade policy
instruments viz. high out-of-quota tariffs (China), adjustment to WTO TRQ and
Export Limit for Mexico (United States), export subsidies to protect domestic sugar
prices (Pakistan), high import tariffs (European Union, Russian Federation, United
States); regional agreements like North American Free trade Agreement (NAFTA),
European Economic Partnership Agreements (EPAs), Everything-But-Arms (EBA),
etc.
Chart 4.8: Trends in Sugar Prices in the US, EU and World Markets
Source: World Bank Commodity Price Data (The Pink Sheet).
4.14 A comparison of domestic wholesale prices of refined sugar (Mumbai) with

international prices of refined sugar traded at London International Financial
Futures and Options Exchange (LIFFE) during the period January 2013 to June 2018
is presented in Chart 4.9. It may be observed from the chart that India’s domestic
prices of sugar have been higher than world prices and generally followed the trend
of international prices up to end-2016. However in January-March 2017 domestic
prices registered a steep increase contrary to international prices which showed a
declining trend. During the period April-June 2017, both domestic and international
prices declined but there was sharp decline in international prices, leading to a large
gap between domestic and international prices and necessitating increase in import
duty from 40 percent to 50 percent which was further increased to 100 percent in
2018 in order to restrict imports and boost domestic prices, which dipped by ` 688
per quintal in Q2 (2018) compared to Q4 (2017).

Price Policy
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Sugarcane
Chart 4.9: International and Domestic Wholesale Prices of Sugar in India

Source: LIFFE for International Prices and M/o Consumer Affairs for Wholesale Prices at Mumbai
4.15 India is a small player in the world markets and has little impact on global prices.
Indian exports and imports have no significant impact on international prices of
sugar (charts 4.10 and 4.11). For example, correlation coefficient between sugar
exported and international prices was very weak (0.069) and in the case of imports
the coefficient was 0.153. Essentially, India is as a price taker in the international
markets, both in case of exports as well as for imports.
Chart 4.10: Export of Sugar from India and its Impact on International Prices
Source: LIFFE for International Prices and DGCIS for Export data

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Sugarcane
Chart 4.11: Import of Sugar by India and its Impact on International Prices
Source: LIFFE for International Prices and DGCIS for Import data
Trade Policy
4.16 Import and export of sugar is free without quantitative restrictions in the country
as on date. Exports of sugar were being carried out under the provisions of the
Sugar Export Promotion Act, 1958 through notified export agencies, viz. Indian
Sugar & General Industry Export Import Corporation Ltd. (ISGIEIC) and State
Trading Corporation of India (STC). However, sugar Export Promotion Act, 1958
was repealed w.e.f. 15th January 1997 and export of sugar was de-canalized and
permitted subject to obtaining Registration-cum-Allocation Certificate (RCAC) from
Agricultural and Processed Food Products Export Development Authority (APEDA).
This requirement of issue of RCAC by APEDA was also dispensed with from April,
2001 and exports of sugar were allowed by various sugar mills/merchant exporters
after obtaining the export release order from Directorate of Sugar.
4.17 The Government of India banned export of sugar from 22nd June 2006 to March
2007 vide notification dated 4th July 2006, to curb rise in prices in the domestic
market. However, in view of higher production during 2006-07 sugar season, the
Government relaxed ban on exports in January, 2007 i.e. before the stipulated
expiry of ban and allowed exports against advance licences and thereafter exports
under Open General Licence (OGL). During the surplus phase of 2006-07 and 2007-
08, sugar exports were permitted without release orders from 31st July 2007. The
requirement of obtaining release orders was reintroduced from 1st January 2009
as production was low during 2008-09 and 2009-10 sugar season. Further, due
to surplus production during 2010-11 and 2011-12 and comfortable stocks in the
country, government permitted exports of 15 lakh tonnes in 2010-11 and 20 lakh
tonnes in 2011-12 under OGL through release order mechanism. The Government
dispensed with the requirement of export release orders in May 2012. Free export
of sugar was allowed subject to prior registration of quantity with DGFT, which was
also removed from 7th September 2015.

Price Policy
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Sugarcane
4.18 Due to high production of sugar in the world since 2012-13, the international prices
of sugar were depressed thereby making Indian sugar exports unviable. To encourage
sugar factories to export raw sugar, a scheme was notified in February, 2014 to give

incentives (on performance basis of meeting 80 percent of export target and 80
percent of ethanol blending) for marketing and promotion of raw sugar production
targeted for export markets for a quantity of 40 lakh tonnes during 2013-14 and
2014-15 sugar season with the condition that the incentives available under the
scheme shall be utilized by the sugar mills for making payment to the farmer. The
incentive amount was increased to `4000 (on flat basis) per MT for export of raw
sugar during 2014-15 sugar season subject to ceiling of 14 lakh MT by notification
on 27th February, 2015. Due to expected drop in sugar production during 2016-17
the Government imposed an export duty of 20 percent on sugar exports under OGL
on 16th June, 2016 to ensure adequate availability of sugar at affordable price in the
domestic market. However, as per subsequent Notification dated 6th July, 2016,
sugar exported under Advance Authorization Scheme was exempted from export
duty.
4.19 Import of sugar was placed under OGL with zero duty in March, 1994. The
Government imposed a basic custom duty of 5 percent and a countervailing duty of
`850 per tonne on imported sugar in April, 1998, which was increased to 20 percent
in April 1999, to 25 percent with surcharge of 10 percent in the budget for the year
1999-2000, to 40 percent on 30th December 1999 and to 60 percent on 9th February,
2000 along with continuance of countervailing duty of `850 per tonne, which was
increased to `950 per tonne in March, 2008 plus 3 percent education cess.
4.20 During 2008-09 and 2009-10 sugar seasons, the domestic sugar production had
declined and to augment the domestic stock of sugar, the Government allowed
import of raw sugar under Advance Authorization Scheme at zero import duty
from 17th April 2009 which was applicable till 30th June 2012. The Government re-
imposed import duty of 10 percent in July, 2012 which was further increased to
15 percent in July 2013. Due to surplus stocks of sugar in the country and to check
imports, the Government increased import duty from 15 percent to 25 percent on
21st August 2014, which was subsequently increased to 40 percent w.e.f. 30th April
2015. In order to address regional production gaps and to maintain domestic prices
at reasonable levels, Government allowed import of 5 lakh tonnes of raw sugar at
zero duty through open general license and also extended the time line for availing
Tariff-rate quota (TRQ) benefit (duty free) of 5 lakh tonnes of raw sugar import from
12th June to 30th June, 2017. These imports were allowed only for eastern, southern
and western zones and subject to quantity and port restrictions for respective zones.
However, in view of sharp decline in international prices and to discourage cheaper
imports, Government raised import duty from 40 percent to 50 percent from 10th
July 2017, which was further increased to 100 percent in February 2018. Keeping in
view production of sugar, stock position and market price sentiments, Government
of India scrapped 20 percent export duty on sugar, which was imposed on June 16,
2016, in March, 2018 in an attempt to boost overseas sales of the commodity and
to help liquidate surplus stock of sugar to check falling domestic price of sugar.

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Sugarcane
4.21 In view of high inventory levels with sugar industry and to facilitate achievement of
financial liquidity, mill-wise Minimum Indicative Export Quotas (MIEQ) have been
fixed for sugar season 2017-18 vide Department of Food and Public Distribution
letter dated 28.03.2018. Export Quotas of 20 Lakh tonnes of all grades of sugar;
viz. raw, plantation white as well as refined, have been prorated amongst sugar
factories by taking into account their average production of sugar during last two
operational sugar seasons and the then season (up to February, 2018).
Market Outlook
4.22 As per USDA Sugar: World Markets and Trade (May 2018), global sugar production
(raw value) is forecast to increase to 191.8 million tons in 2017-18 mainly due to
improved yields and acreage in Thailand and India. Brazil’s production is forecast
down by 4.7 million tonnes to 34.2 million tons with more cane diverted for ethanol
production. Global production in 2018-19 is projected to be down to 188.3 million
tons due to projected lower production in Brazil, Pakistan, European Union, Russia
and Guatemala which is likely to more than offset record production in India and
Thailand. Global exports and imports are likely to be marginally lower in 2018-19
than 2017-18.
4.23 Global human domestic consumption of sugar is estimated at 174 million tons for
2017-18. However, projection of consumption for 2018-19 is slightly higher at 177.6
million tons indicating possibilities for increased consumption during the year. Major
contributors to increase in consumption are India, USA, UAE, Indonesia, Pakistan,
Bangladesh, Algeria, Malaysia, Saudi Arabia and Peru etc.
4.24 As per OECD-FAO Agricultural Outlook 2018-2027, overall growth in consumption
demand for sugar is likely to slow down during the next decade. The demand, which
grew at an annual average of 1.65 percent during the decade 2008-17, is projected
to grow at lower rate (1.48 percent) during the decade 2018-27. Per capita food
consumption of sugar is likely to grow at 0.51 percent during 2018-27 in comparison
to 0.47 percent during the previous decade. Per capita consumption is likely to come
down in EU, though consumption is likely to increase in India, China, Sub-Saharan
Africa (SSA) and in Middle East and North Africa (MENA). Overall consumption is
expected to grow as a result of growth in population during the outlook period.
However, the total growth in demand during the next decade will still be lower
than the previous decade. Inter alia it might be due to lower growth projected for
ethanol production during the next decade. In the past ten years, global production
of ethanol grew by 64 billion litres (bln L), equivalent to 3.9 percent per annum
growth and over the next ten years, only an addition of 12 bln L (0.7% per annum)
is projected, despite countries like Brazil and India deciding to divert more cane for
ethanol production.
4.25 Global ending stocks of sugar for Marketing Year 2018-19 are projected to be 49
million tons as against ending stock of 49.5 million tons estimated for 2017-18.
Stocks in Pakistan and Thailand are likely to increase sharply and in India marginally.
In China, Indonesia, USA, Mexico and some other countries, stocks are expected to
fall in 2018-19.

Price Policy
for
Sugarcane
4.26 As per FAO’s Food Outlook July 2018 international sugar prices (raw sugar) have
been declining since the beginning of 2018 due to large expansion in production
capacity driven by remunerative returns and rising world sugar inventories.

Increasing production coupled with lower import demand have put further
downward pressure on international prices. Early forecasts for 2018-19 indicate
a continuation of imbalance between demand and supply but firm energy prices
could boost demand for ethanol which may boost sugar prices.
****

Chapter
5
Costs and Returns
5.1 The Commission considers the cost of production and other important factors
such as demand and supply situation, trends in domestic and international prices,
Chapter-5
inter-crop price parity, margin for sugarcane growers on account of risk and profits,
sugar recovery, price realized from sale of sugar and its by-products, viz., molasses,
bagasse and press-mud, terms of trade between agricultural and non-agricultural
sectors, the likely impact of Fair and Remunerative Price (FRP) on consumers,
producers and overall economy along with rational utilization of land, water, and
other production resources, and a minimum of 50 percent as the margin over cost
of production, while recommending FRP of sugarcane.
5.2 The Commission uses State-wise cost estimates provided by the Directorate of
Economics & Statistics (DES), Department of Agriculture, Cooperation and Farmers
Welfare, Ministry of Agriculture and Farmers Welfare, Government of India compiled
under ‘Comprehensive Scheme (CS) for studying the Cost of Cultivation of Principal
Crops in India’. Since CS data is generally available with a time lag of three years in
case of sugarcane crop, it needs to be projected for crop year 2018-19 (sugar season
2019-20). Based on CS data, State-wise projections of cost of cultivation (CoC) are
made for the subsequent season. The projected CoC estimates of sugarcane for
crop year 2018-19 are based on actual estimates available for latest three years viz.
2014-15 to 2016-17 for each State. The projected CoC estimates capture movement
in overall input cost separately over each of the past three years viz. 2014-15, 2015-
16 and 2016-17 for crop year 2018-19.
5.3 An assessment of likely changes in input costs for the crop year 2018-19 with
reference to each of the above mentioned three consecutive years ending with
2016-17 is made by constructing the Composite Input Price Indices (CIPIs) (base
2011-12=100) based on latest prices of major inputs like human labour, bullock
labour, machine labour, fertilisers, manures, seeds, pesticides and irrigation as per
data available from Labour Bureau, Ministry of Labour and Employment, State
Governments and Office of Economic Adviser, Ministry of Commerce & Industry.
Based on CIPIs thus constructed, the Commission projects state-wise CoC A2, A2+FL
and C2.

Price Policy
for
Sugarcane
5.4 State-wise cost of production (CoP) A2, A2+FL and C2 is then derived from these
projected CoC estimates using projected yields. Subsequently, all-India estimates
of CoP A2, A2+FL and C2 are derived based on state-wise CoP and production shares.
These projected all-India estimates of CoP are considered by the Commission while
formulating price policy recommendations.
5.5 The Commission has undertaken cost projection exercise on the basis of latest three
year costs for each State under certain implicit assumptions. One, fixed cost do not
change in the short run. Two, since yield varies from year to year due to multiplicity
of factors, so three years’ average has been taken to smoothen out fluctuations in
yield and hence in CoP.
Costs and Returns of Sugarcane during TE2016-17

5.6 The Commission examines actual costs and returns of the crop for which latest
Costs and Returns

CS data is available from DES. It is pertinent to mention that gross value of output
(GVO) is estimated at prevailing market prices during harvest season in village/
cluster of villages where the crop is grown and harvested. With this stipulation, an
analysis of rate of return over CoC A2 and A2+FL for sugarcane during TE2016-17 is
presented in Table 5.1.
5.7 To estimate returns of sugarcane crop, gross returns over CoC A2 (GVO less A2) and
gross returns over A2+FL (GVO less A2+FL) are calculated. The average CoC and
average gross returns derived for sugarcane during TE2016-17 are presented in
Table 5.1 and Chart 5.1. It is evident from Table 5.1 that the average gross returns
over CoC A2 and A2+FL are positive for all States. The average gross returns over A2
vary from 82 percent in Maharashtra to 329 percent in Uttar Pradesh while average
gross returns over A2+FL range from 52 percent in Maharashtra to 211 percent in
Uttar Pradesh.
Table 5.1: Average Gross Returns of Sugarcane, TE2016-17
Cost A2 Cost A2+FL GVO Gross Returns over A2 Gross Returns over A2+FL
State `/ha Percent `/ha Percent

`/ha (Col.4- (Col.5/ (Col.4- (Col.7/
Col.2) Col.2)*100 Col.3) Col.3)*100
(1) (2) (3) (4) (5) (6) (7) (8)
Andhra Pradesh 97818 113923 205995 108177 111 92072 81
Karnataka 59247 71996 174700 115454 195 102704 143
Maharashtra 109705 131326 200014 90309 82 68689 52
Tamil Nadu 111260 132210 243277 132018 119 111068 84
Uttar Pradesh 39683 54764 170132 130449 329 115368 211
Uttrakhand 38963 49820 153143 114181 293 103324 207
All-India 65124 81709 183468 118343 182 101759 125
Source: CACP using CS data.

Price Policy
for
Sugarcane
Chart 5.1: Average Gross Returns of Sugarcane, TE2016-17
Costs and Returns
Source: CACP using CS data.
Movement in Agricultural Labour Wages and Farm Inputs

5.8 Growth in average daily wage rates of agricultural labour in major States and at
all-India level (at current prices and constant prices 2017-18=100) during TE2017-
18 are given in Table 5.2. At current prices, at all-India level, agricultural wage rate
has increased by 5.6 percent in 2015-16, 6.4 percent in 2016-17 and 4.5 percent
in 2017-18; while at constant prices, it declined by 1.2 percent in 2015-16, and
increased by 4.2 percent in 2016-17 and 3.1 percent in 2017-18. Further, Chart
5.2 reflects State-wise average daily wages of agricultural labour during crop year
2017-18 and growth in average daily wages during crop year 2017-18 over 2016-17.
The average wage rate is the highest (`432 per day) in Tamil Nadu and the lowest
in Gujarat (`236 per day). Haryana registered the lowest growth of 0.7 percent in
average daily wage rate while Andhra Pradesh recorded the highest growth of 8.0
percent. The State-wise and all-India details of monthly average of daily wage rates
for agricultural labour at current prices are given in Annex Table 5.1.

Price Policy
for
Sugarcane
Table 5.2: Growth in Average Daily Wage Rates of Agricultural Labour-
States and All-India
Growth (percent) at Constant Prices

Growth (percent) at Current Prices
State (2017-18=100)
2015-16 2016-17 2017-18 2015-16 2016-17 2017-18
8.4 7.2 8.7 1.6 5.2 5.9
Andhra Pradesh
(8.0) (4.3)
7.3 1.6 5.8 5.5 1.8 5.7
Bihar
(6.7) (6.9)
7.0 7.3 4.2 -0.3 7.1 4.2
Gujarat
(5.2) (4.6)
4.4 1.0 0.5 0.1 -2.6 -0.7
Haryana
(0.7) (-0.8)
10.8 5.1 5.8 1.8 -1.4 3.8
Costs and Returns

Karnataka
(6.3) (3.0)
4.1 11.7 2.1 -2.4 8.9 1.8
Maharashtra
(3.8) (3.2)
-3.8 3.8 4.9 -11.8 -2.2 0.1
Tamil Nadu
(5.1) (-1.4)
7.0 7.2 2.7 0.0 11.1 2.8
Uttar Pradesh
(4.1) (4.9)
5.6 6.4 4.5 -1.2 4.2 3.1
All-India
(5.3) (3.3)
Note: 1. Growths are derived from the averages taken for the period from October to September for 2015-16
& 2016-17, while it is from October to May for 2017-18.
2. Figures in bracket show percentage change during October to May, 2018 over October to May, 2017.
Source: Labour Bureau, Ministry of Labour & Employment, Government of India.
Chart 5.2: Average Daily Wage Rates and Growth during 2017-18
Note: Average is from October to May.

Source: Labour Bureau, Ministry of Labour & Employment, Government of India.

Price Policy
for
Sugarcane
5.9 The movement of the Wholesale Price Index (WPI) for various farm inputs (Base:
2011-12=100) during 2017-18 over 2016-17 is presented in chart 5.3. The index
for HSD rose from 80.3 to 89.5, registering a growth of 11.5 percent during the
corresponding period of the previous year. The indices of fertilizers & nitrogen
components, agricultural tractors and lube oils also moved up by registering
growth of 0.5 percent, 0.6 percent and 0.5 percent, respectively. However, indices
of electricity, cattle feed, fodder, and pesticides and other agrochemical products
declined by 0.3 percent, 2.4 percent and 14.8 percent and 0.8 percent, respectively.
The month-wise indices from 2012 to 2018 are given in Annex Table 5.2.
Chart 5.3: Movements in Prices of Farm Inputs
Costs and Returns
Source: DIPP, Ministry of Commerce and Industry.
5.10 Chart 5.4 shows that the share of human labour in sugarcane cultivation is very high
and accounted for 56.6 percent of the total cost of production (A2+FL) in TE2016-
17. As the wage rates have been increasing rapidly in the recent years and there is
high share of human labour (including family labour) in the total cost of production,
while share of machine labour in total cost of production is low (4.7 percent), it is
imperative to encourage farmers to adopt farm mechanization in a big way, so as to
reduce cost of cultivation and improve profitability of sugarcane.

Price Policy
for
Sugarcane
Chart 5.4: Share of Inputs in Total Cost of Production (A2+FL), TE2016-17
Costs and Returns

Note: Others include Bullock Labour, Insecticides, Interest on Working Capital, Rent Paid for Leased-in-Land,
Land Revenue, Cesses & Taxes, Depreciation on Implements & Farm Buildings and Miscellaneous Expenses.
Source: CACP calculations using CS data.
Cost Projections for Sugar Season, 2019-20

5.11 Based on CIPI, State-wise CoC is projected. The projected CoC is used to estimate
State-wise CoP by using respective three year average yield. Subsequently, all-India
weighted average projected CoP with weights being shares of States in all-India
production during TE2017-18, has been worked out for sugar season 2019-20
(Table 5.3). The actual CoC estimates for different States for 2015-16 and 2016-17
are given in Annex Table 5.3. The projected CoP of sugarcane for various States for
the sugar season 2019-20 has been adjusted at 10 percent sugar recovery rates
using State-specific recovery rates. Table 5.3 presents the projected CoP A2, A2+FL
and C2 adjusted for recovery rate of 10 percent. For example, the projected CoP
A2, A2+FL and C2 in Uttar Pradesh, the largest producer, are `119, `165 and `243
per quintal, respectively, and recovery rate is 10.54 percent. The costs adjusted for
10 percent recovery work out to `113 (119*10/10.54), `157 (165*10/10.54), and
`231 (243*10/10.54) per quintal, respectively.

Price Policy
for
Sugarcane
Table 5.3: Projected CoP of Sugarcane, Sugar Season 2019-20
(`/qtl)
Average Recov- Costs at State-specific Costs at 10 percent
ery Rate during recovery rates recovery rate
States
TE2017-18
(percent) A2 A2+FL C2 A2 A2+FL C2
Andhra Pradesh 9.40 155 181 260 165 192 277
Karnataka 10.49 109 133 188 104 126 179
Maharashtra 11.21 136 164 214 122 146 191
Tamil Nadu 8.53 153 182 223 180 214 262
Uttar Pradesh 10.54 119 165 243 113 157 231
Uttarakhand 9.04 98 126 212 109 139 234
All-India 10.47 126 162 229 121 156 220
Costs and Returns
Source: CACP Calculations.
5.12 Charts 5.5 shows supply curve for A2+FL CoP by States in ascending order with their
corresponding relative shares in all-India production. Supply curves are graphical
representation of CoP, which represent the quantum of production of sugarcane
produced at different CoP in various States. It may be noted from chart 5.5 that
all-India A2+FL for sugarcane, adjusted for 10 percent recovery, is projected at `156
per quintal. The all-India modified cost A2+FL, which includes transportation and
insurance charges of `26 per quintal, is projected at `182 per quintal for the sugar
season 2019-20. All India CoP A2+FL covers 37 percent of sugarcane production,
whereas, all-India modified CoP A2+FL covers 89 percent of production.
Chart 5.5: Supply Curve and Projected Costs, Sugar Season 2019-20
Source: CACP calculations.

Price Policy
for
Sugarcane
Relative Returns
5.13 Inter-crop price parity being one of the important factors for determination of MSP,
per hectare returns of different competing crops are computed. This comparison
of returns may be useful to understand why farmers are attracted to a particular
crop over other competing crops. Table 5.4 shows relative average gross returns
measured in percentage terms over CoC A2+FL for various competing crops/crop
combinations with reference to sugarcane. Sugarcane has more than two-times
returns than paddy+wheat and other main crop combinations. It is found that
there is significant degree of disparity in returns earned from sugarcane and other
mandated crops.
Table 5.4: Relative Average Gross Chart 5.6: Relative Average Gross
Returns (%) with Respect to Sugarcane Returns (%) with Respect to Sugarcane
Costs and Returns

Relative Gross Returns
Crops over A2+FL with re-
spect to Sugarcane
Sugarcane 100
Cotton+Wheat 50
Paddy+Wheat 49
Paddy+Paddy 36
Soybean+Wheat 34
Soybean+Gram 29
Note: For cotton, paddy and soybean, the average is for the years 2013-14 to 2015-16; and for other crops,
the average is from 2014-15 to 2016-17.
Source: CACP Calculations.
5.14 The share of Bihar, Gujarat and Haryana in all-India sugarcane acreage during
TE2017-18 was 5.14 percent, 3.61 percent and 2.19 percent, respectively, whereas,
their production shares in total sugarcane production were 4.18 percent, 3.50
percent and 2.34 percent, respectively. Considering the reasonably adequate share
in all-India area and production of sugarcane, the Commission recommends that
Bihar, Gujarat and Haryana should be included under the Comprehensive Scheme.
Recapitulation
5.15 Given the time lag of three years in availability of data, the Commission, by
constructing CIPIs, projects the cost estimates A2, A2+FL and C2 per quintal for the
ensuing season 2018-19 (Sugar Season 2019-20). The all-India weighted average
projected CoP A2+FL adjusted at 10 percent sugar recovery for the 2019-20 sugar

Price Policy
for
Sugarcane
season is projected at `156 per quintal; whereas, all-India modified CoP A2+FL
(inclusive of costs of transportation and insurance charges) is projected at `182
per quintal. All-India weighted projected CoP A2+FL at State-specific recovery rates
increased by 3.2 percent during crop year 2018-19 over 2017-18, whereas, it varied
from 0.8 percent for Uttarakhand to 5.8 percent in Maharashtra (details in Annex
Table 5.4). These projected cost estimates have been considered in formulation of
price policy recommendations. Given high share of human labour at 56.6 percent
and low share of machine labour (4.7 percent) in the total cost of production
(A2+FL), it is imperative to promote farm mechanization on large scale to reduce
cost of cultivation and improve profitability.
*****
Costs and Returns

Chapter
6
Considerations and
Recommendations
Chapter-6
Pricing of Sugarcane and Cane Arrears
6.1. Pricing of sugarcane is governed by statutory provisions of the Sugarcane (Control)
Order, and cane farmers are required to be compensated as per FRP. However,
Governments of Bihar, Haryana, Punjab, Uttarakhand and Uttar Pradesh announce
State Advised Price (SAP) higher than the FRP, which distort the market and make it
difficult for sugar mills to pay to farmers. This distortion has also resulted in mounting
cane price arrears of `23,232 crores in May, 2018 and weak financial health of sugar
mills. More so, increased production has created a situation of excess supply over
demand leading to lower prices of sugar.
6.2. With a view to ensuring timely payment of cane price arrears to farmers the
Government has recently (2018) announced a ‘Comprehensive Package’ of about
` 7,000 crores and to improve liquidity position of sugar mills, As a result of which,
ex-mill prices of sugar have improved and has resulted in reduction in cane price
arrears, from `23,232 crores in May, 2018 to `17684 crores as on 18.07.2018. UP
alone accounted for `11618 crores (about 66 percent), mainly due to a high SAP in
the state. The Commission recommends that announcement of SAP by the States
should be stopped immediately as it does not incentivise efficiency and also creates
distortions in the market.
Price Stabilisation Fund

6.3. In order to implement Revenue Sharing Formula (RSF) recommended by Dr.
Rangarajan Committee, the Commission had recommended in its earlier reports,
creation of Price Stabilisation Fund (PSF) to pay the difference between RSF payment
and FRP during the years of depressed sugar prices. However, this fund could not
be created due to uncertainty of funds/source of funds. Imposing sugar tax on

Price Policy
for
Sugarcane
soft drinks/beverages as has been done in many developed and some developing
countries in the recent years could be one of the sources to raise revenue to
support PSF. In addition, during high prices of sugar and by-products, part of surplus
generated under RSF can be retained and deposited in the PSF. Discontinuation
of levy sugar obligation on mills has reduced financial burden on sugar industry,
therefore, industry should also contribute towards the PSF. Possibility of dual pricing
of sugar for industrial and household sector can also be explored. The Commission
Considerations and Recommendations
recommends that a Committee should be constituted to explore possibilities of

creating and managing PSF.
Payment of Dues to Farmers

6.4. Sugar mills are unable to pay to farmers within 14 days, as per provisions of
Sugarcane Control Order (SCO), as they generate revenue from the sale of sugar
after few weeks/months. Mills take loans from banks to make cane payments
to farmers, which increases their costs. The industry has requested to explore
feasibility of payment to farmers in instalments as is a practice in Gujarat. Similar
practice of cane payment in instalments was followed by cooperative sugar mills in
Maharashtra and Karnataka prior to FRP regime. CACP suggests that a Committee
should be constituted under the Department of Food and Public Distribution to
examine feasibility of making payment in instalments, where the mills should be
statutorily required to pay certain proportion of the FRP within 14 days of supply
of cane by the farmers and the remaining amount due before the end of the sugar
season.
Incentivising Sugar Recovery

6.5. Sugar recovery depends on crop variety, climatic conditions and technological
interventions (crushing efficiency of mills). There are large intra-regional differences
in sugar recovery rates, which can be attributed mainly to technological efficiency
of sugar mills as agro-climatic conditions and crop varieties grown in a region will
be almost similar. Therefore, a mechanism for incentivising efficient mills along with
the farmers on every percentage point increase in recovery may be evolved. This
will encourage sugar mills to improve manufacturing efficiency and productivity,
which will benefit both farmers and millers. The Commission, therefore, suggests
that a detailed study may be conducted in major producing states to recommend a
mechanism for incentivising efficient sugar mills along with farmers for better sugar
recovery.
Cane Area Reservation

6.6. Government of India delegated the power of reserving the cane area in July,
1966, as per Sugarcane (Control) Order, 1966, Provision No.6 - power to regulate
distribution and movement of sugarcane. The committee headed by Dr. C.
Rangarajan on de-regulation of sugar sector had recommended that states should
encourage development of market-based long-term contractual arrangements and
phase out cane reservation area and bonding over a period of time. Maharashtra is

Price Policy
for
Sugarcane
the only state which has no reservation of cane area and farmers are free to sell to
any mill. States like Andhra Pradesh, Bihar, Haryana, Karnataka, Punjab, Telangana,
Uttarakhand, Uttar Pradesh, which have cane area reservation, have suggested
continuing with the reservation criteria for sugar factories. However, Commission
is of the considered view that the cane area reservation should be dispensed with
and farmers should be free to supply cane to the mill of their choice, which makes
higher and timely payment within stipulated time frame.

6.7. New National Policy on Biofuels - 2018 has a provision of production of ethanol
directly from sugarcane juice, which provides an opportunity for sugar industry to
diversify. Now, the mills are allowed to use sugarcane juice and B-heavy molasses
in addition to C-heavy molasses to produce ethanol. For this, Government has
extended soft loans with interest subvention to mills for setting up new distilleries
and installation of incineration boilers to augment ethanol production capacity and
industry is expected to expand production capacity. The Government announced
a price of `47.49/litre for ethanol produced from B-heavy molasses and sugarcane
juice but as per industry estimates, the price is not viable at current FRP of `275
per quintal. Therefore, the Commission is of the considered opinion that in order to
meet the desired objectives of the policy initiative, a comprehensive study should
be undertaken for fixing remunerative price of ethanol produced from B-heavy
molasses and sugarcane juice. This will also help in reducing import dependency on
crude oil, cleaner environment, financial viability of sugar mills, additional income
to farmers and employment generation in rural areas.
Trade Policy
6.8. With a view to improving the liquidity position of mills, thereby enabling them
to clear the cane price arrears of farmers, Central Government has taken several
initiatives. Import duty on sugar was increased from 50 percent to 100 percent
in February, 2018 to restrict imports and stock holding limits were imposed on
producers of sugar for the month of February and March 2018 to stabilize domestic
sugar prices. Customs duty on export of sugar was withdrawn, mill-wise Minimum
Indicative Export Quotas (MIEQ) of 2 million tonnes of sugar for export has been
allotted during sugar season 2017-18 and allowed Duty Free Import Authorization
(DFIA) Scheme in respect of sugar to facilitate and incentivize export of surplus
sugar by sugar mills. The Commission, therefore, proposes that the import duty
structure need to be monitored on continuous basis and accordingly fixed based on
the domestic and international price scenario.

6.9. Excess production over consumption has led to depressed sugar prices and thus to
sustain income of farmers, there is a need to reduce area under sugarcane cultivation.
Also, several studies have demonstrated that intercropping helps increasing returns
to farmers along with addressing the issue of loss of soil nutrients. For instance,

Price Policy
for
Sugarcane
sugarcane crop depletes a considerable amount of nutrients from soil but soybean
and pulses as intercrops can help in increasing productivity per unit area of land,
improve soil fertility and reduce cost of production. Therefore, efforts should be
made to promote intercropping in sugarcane cultivation.
Micro Irrigation
6.10. Sugarcane requires 1500 to 2500 mm water and a large quantity of nutrients. Drip
irrigation saves irrigation water requirement through reduction in conveyance loss,
reduced evaporation from soil, continuous maintenance of soil available moisture
and thereby high water use efficiency. Apart from saving water, drip fertigation
saves fertilizer by enhancing fertilizer use efficiency and reducing environmental
pollution. This method results in less weed infestation and provides option of
automation in irrigation and chemigation thereby reducing labour requirement. In
view of above advantages of drip irrigation and fertigation, the Commission is of
the view that it may be made mandatory for sugarcane crop. A time limit of 3 to 5
years (depending on sugarcane area in a particular state) may be set to achieve the
target. Government of Maharashtra has already introduced this provision.

6.11. Mechanization of sugarcane production, from soil preparation and planting to
harvesting, is key to improve its competitiveness. Some progress has been made
in mechanization of planting and harvesting operations in few states but some
issues have cropped up. For example, according to a study by S Nijalingappa
Sugar Institute, Belagavi, Karnataka in 2017, it was reported that in mechanised
harvesting trash content was much higher and there was weight loss to the extent
of 9.8 percent as well as quality deterioration. Hence, there is a need to develop and
promote appropriate machinery and other technologies particularly for planting
and harvesting of sugarcane.
Cost of Production and FRP of Sugarcane

6.12. The all-India weighted average projected cost A2+FL, adjusted at 10 percent recovery
for the 2019-20 sugar season is projected at `156 per quintal. The modified A2+FL
cost inclusive of cost of transportation and insurance premium of sugarcane for the
2019-20 sugar season is projected at `182 per quintal.
6.13. The Stock-to-Use Ratio sharply rose to 43.5 percent in 2017-18, mainly due to 58.8
percent increase in sugar production. The estimated closing stock for the year 2017-
18 is projected to be about 11 million tonnes, the highest in last 7 years. Average
ex-mill prices of sugar in India witnessed a significant fall in 2017-18, from `3609
per quintal in 2016-17 to `3183 per quintal in 2017-18, in anticipation of higher
production during current and next sugar season. As per USDA estimates, global
stocks for Marketing Year 2018-19 are forecast to be high due to higher global
production led mainly by India and Thailand. Hence, there is a possibility of decline
in global prices during Marketing Year 2018-19, with an adverse impact on domestic
prices in India. Taking into consideration all these relevant factors, the Commission

Price Policy
for
Sugarcane
is of the view that there is no scope for increasing the FRP and recommends that
FRP of sugarcane for 2019-20 sugar season be fixed at `275 per quintal linked
to basic recovery of 10 percent, same as the sugar season 2018-19. For each 0.1
percentage point increase in recovery rate over and above 10 percent, the FRP
would be increased by `2.75 per quintal. Similarly, for each 0.1 percentage point
decline in recovery rate below 9.5 percent, the FRP would be reduced by `2.75 per
quintal. All-India average recovery rate being 10.73 percent during 2017-18, the
FRP recommended works out to `295 per quintal. The Commission feels that these

considerations and price policy recommendations would incentivize sugar mills as
well as sugarcane farmers and help cane growers to get remunerative prices and
higher farm income.
(Vijay Paul Sharma)

Chairman
(Shailja Sharma) (A. Narayanamoorthy)
Member Secretary Member (O)
15th August, 2018

Annex
Tables
Annex Tables

Price Policy
for
Sugarcane
Annex Table 1.1: Sugarcane: Area, Production and Yield
( ‘000 hectares, ‘000 tonnes, Kg. per hectare)
State 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18*
Sub-Tropical Region
Area 2736 2662 2474 2323 2635 2663 2756 2781 2688 2693 2683 2787
Production 161605 151756 129398 137050 150018 159031 165310 167684 167469 177219 167771 202254
Yield 59064 57017 52305 58999 56939 59712 59977 60289 62306 65807 62541 72578
Bihar
Area 130 109 112 116 248 218 250 258 244 249 240 243
Production 5956 3855 4960 5033 12764 11289 12741 12882 12649 12649 13036 16511
Yield 45953 35496 44324 43422 51466 51714 50896 49916 51837 59035 54414 67948
Haryana
Area 140 140 90 74 85 95 101 102 93 93 102 114
Production 9580 8860 5130 5335 6042 6959 7437 7499 6692 6692 8223 8729
Yield 68429 63286 57000 72095 71082 73253 73634 73520 71957 71957 80618 76570
Punjab
Annex Tables
Area 99 110 81 60 70 80 83 89 90 90 88 93
Production 6020 6690 4670 3700 4170 5653 5919 6675 6607 6607 7152 7533
Yield 60808 60818 57654 61667 59571 70663 71313 75000 73411 73411 81273 81000
Uttarakhand
Area 121 124 107 96 107 108 110 104 102 97 93 103
Production 6100 7686 5590 5842 6498 6311 6785 5940 6165 5886 6477 7142
Yield 50413 61984 52243 60854 60896 58435 61736 56971 60608 60678 69645 69547
Uttar Pradesh
Area 2247 2179 2084 1977 2125 2162 2212 2228 2141 2169 2160 2234
Production 133949 124665 109048 117140 120545 128819 132428 134689 133061 145385 140169 162338
Yield 59626 57212 52326 59251 56727 59583 59868 60453 62155 67029 64893 72667
Tropical Region
Area 2244 2211 1775 1698 2086 2204 2077 2036 2158 2008 1753 1988
Production 185684 188234 147670 148456 184529 193553 167556 175195 184228 159885 138298 152844
Yield 82739 85128 83199 87419 88460 87803 80664 86034 85367 79612 78887 76895
Andhra Pradesh
Area 264 247 196 158 192 204 196 192 139 122 103 99
Production 21692 20296 15380 11708 14964 16686 15567 15385 9987 9353 7830 7948
Yield 82167 82170 78469 74101 77938 81794 79423 80130 71849 76664 76019 80283
Telangana
Area 38 35 29 35
Production 3343 2405 2061 2217
Yield 87974 68714 71069 63343
(Contd..)

Price Policy
for
Sugarcane
Annex Table 1.1: Sugarcane: Area, Production and Yield
( ‘000 hectares, ‘000 tonnes, Kg. per hectare)
State 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18*
Gujarat
Area 214 211 221 154 190 202 176 174 208 157 169 184
Production 15630 15190 15510 12400 13760 12750 12690 12550 14330 11120 11950 12234
Yield 73037 71991 70181 80519 72421 63119 72102 72126 68894 70828 70710 66489
Karnataka
Area 326 306 281 337 423 430 425 420 480 450 397 370
Production 28670 26240 23328 30443 39657 38808 35732 37905 43776 37834 27378 29902
Yield 87944 85752 83018 90335 93752 90251 84075 90250 91200 84075 68962 80751
Maharashtra
Area 1049 1093 768 756 965 1022 933 937 1030 987 633 902
Production 78568 88437 60648 64159 81896 86733 69648 76901 84699 73680 52262 72637
Yield 74898 80912 78969 84866 84866 84866 74650 82072 82232 74650 82524 80529
Annex Tables
Tamil Nadu
Area 391 354 309 293 316 346 347 313 263 257 218 184
Production 41124 38071 32804 29746 34252 38576 33919 32454 28093 25494 18988 16562
Yield 105123 107484 106197 101452 108392 111362 97688 103575 106788 99083 86979 90108
All India
Area 5151 5055 4415 4175 4885 5038 4999 4993 5067 4927 4436 4774
Production 355520 348188 285029 292302 342382 361037 341200 352142 362333 348448 306069 355098
Yield 69022 68877 64553 70020 70091 71667 68254 70522 71512 70720 69001 74375
Note: * Third Advance Estimates

Source: DES, Ministry of Agriculture and Farmers Welfare

Price Policy
for
Sugarcane
Annex Table 1.2: State-wise Production of Sugar
(Lakh Tonnes)
State 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
(E)
Sub-tropical 105.9 91.9 50.7 61.5 71.5 86.2 93.0 85.2 91.0 88.3 109.7 146.9
Region
Bihar 4.8 3.4 2.2 2.6 3.9 4.5 5.1 6.0 5.3 5.0 5.25 7.15
Haryana 6.8 6.0 2.3 2.5 3.9 4.9 5.1 5.4 5.7 5.4 6.65 7.32
Punjab 5.5 5.3 2.4 1.8 3.0 3.9 4.4 4.7 5.4 6.7 6.60 8.20
Uttarakhand 5.3 4.0 2.2 2.9 3.1 3.3 3.4 3.0 3.3 2.7 3.46 4.50
Uttar Pradesh 83.5 73.2 41.5 51.7 57.6 69.6 75.0 66.1 71.4 68.5 87.73 119.74
Tropical Region 172.9 167.6 94.8 125.2 168.3 173.8 154.8 154.8 187.9 158.3 87.78 167.82
Andhra 6.8 5.7 5.5 3.85 4.63
Pradesh
Telangana 3.3 3.2 2.8 1.20 2.70
Andhra 19.2 13.4 5.9 5.1 10.1 11.4 9.8 10.1 8.9 8.3 5.05 7.33
Pd+Telangana
Annex Tables
Gujarat 13.9 13.7 10.2 11.9 12.7 10.0 11.3 11.8 11.5 11.2 8.75 11.10
Karnataka 25.4 28.4 16.8 25.1 36.4 38.7 34.4 41.6 49.9 40.5 21.43 36.86
Maharashtra 90.1 90.8 46.0 70.4 90.7 90.0 79.9 77.2 105.2 84.7 42.01 107.08
Tamil Nadu 24.2 21.4 16.0 12.7 18.4 23.8 19.3 14.2 12.6 13.7 10.54 5.45
Others 3.2 3.5 1.2 1.4 3.8 3.5 4.1 5.5 5.7 4.6 4.66 6.46
All India 282.0 263.0 146.8 188.0 243.5 263.4 251.8 245.5 284.6 251.2 202.27 321.19
Note : E-Estimated upto 30.06.2018


Price Policy
for
Sugarcane
Annex Table 1.3: Comparative Statement of Fair and Remunerative Price (FRP)/ State
Advised Price (SAP)
State Sugar Season

2015-16 2016-17 2017-18
Andhra Pradesh Sugar mills are paying FRP Range of Sugarcane Price
with incentives which differ paid `293 to `236 per quintal
from factory to factory in the included ` 6 per quintal
range of `230/- to `264.20 incentive to farmers by the
per quintal state government.
Bihar (SAP) `250 per quintal (Un- `260 per quintal (Un- `260 per quintal
recommended varieties) recommended varieties)** (Un-recommended
varieties)**
`260 per quintal (Central `280 per quintal (General `280 per quintal (General
Varieties) Varieties)** Varieties)**
`270 per quintal (Early `300 per quintal (Early `300 per quintal (Early
Varieties) Varieties)** Varieties)**
Annex Tables
Gujarat Sugar mills to pay FRP or Sugar mills to pay FRP or more Sugar mills to pay FRP
more based on profit sharing based on profit sharing or more based on profit
sharing
Haryana (SAP) `310 per quintal (Early `320 per quintal (Early `330 per quintal (Early
Varieties) Varieties) Varieties)
`305 per quintal (Mid `315 per quintal (Mid Varieties) `325 per quintal (Mid
Varieties) Varieties)
`300 per quintal (Normal `310 per quintal (Late Varieties) `320 per quintal (Late
Karnataka FRP is the price to be paid by FRP is the price to be paid by the FRP is the price to be paid
the sugar mills. Ist instalment sugar mills. Highest `305 per by the sugar mills. Highest
`220/- to `250/- per quintal quintal paid by Venkteshwara `305 per quintal paid
including harvesting & power project and minimum by Venkteshwara power
transport charges of `50/- `230 per quintal. project and minimum
per quintal. `230 per quintal.
Maharashtra 80% of FRP as Ist Instalment. Highest cane price paid by Highest cane price paid by
IInd instalment /balance of Gurudatta sugar `329.7 per Gurudatta sugar `329.7
FRP is to be paid after closure quintal and lowest by Purti per quintal and lowest
of season. Highest `214.50/-
per quintal doodganga and Sugar mill `252.7 per quintal by Purti Sugar mill `252.7
lowest `127.50 per quintal including harvesting and per quintal including
purti S.S.K. transport charges. harvesting and transport
charges.
Punjab (SAP) `295 per quintal (Early `300 per quintal (Early `310 per quintal (Early
`285 per quintal (Mid `290 per quintal (Mid Varieties) `300 per quintal (Mid
`280 per quintal (Normal `285 per quintal (Late Varieties) `295 per quintal (Late
Tamil Nadu `285 per quintal linked `275 per quintal linked to 9.5% `275 per quintal linked
to 9.5% with increase of with increase of `2.42 for every to 9.5% with increase
`2.42 for every 0.1% point 0.1% point increase in recovery of `2.68 for every 0.1%
point increase in recovery
increase in recovery above above 9.5%. (excludes `10 above 9.5%. (excludes
9.5%. (includes `10 per per quintal or above/actual `10 per quintal or above/
quintal transport) transport) actual transport)
(Contd..)

Price Policy
for
Sugarcane
Annex Table 1.3: Comparative Statement of Fair and Remunerative Price (FRP)/ State
Advised Price (SAP)
State Sugar Season

2015-16 2016-17 2017-18
Telengana All 7 sugar mills are paying
same price based on G.O.I
notification ranging from
`237.50 to `270.0 per
quintal.
Uttarakhand (SAP) `290 per quintal (Early `317 per quintal (Early `326 per quintal (Early
`280 per quintal (General `307 per quintal (Normal `316 per quintal (Normal
`302 per quintal (Rejected `306 per quintal (Rejected
Uttar Pradesh `290 per quintal (Early `315 per quintal (Early `325 per quintal (Early
(SAP) Varieties)* Varieties) Varieties)
Annex Tables
`280 per quintal (Normal `305 per quintal (Normal `315 per quintal (Normal
Varieties)* Varieties) Varieties)
`275 per quintal (Rejected `300 per quintal (Rejected `310 per quintal (Rejected
Varieties)* Varieties) Varieties)
All India FRP Basic FRP at 9.5 % recovery Basic FRP at 9.5 % recovery Basic FRP at 9.5 %
announced `230 per quintal with `230 per quintal with recovery `230 per quintal
by the Central additional increase of `2.42 additional increase of `2.42 for with additional increase
Government. for every 0.1% point increase every 0.1% point increase in of `2.42 for every 0.1%
in the basic recovery % the basic recovery % point increase in the basic
recovery %
Note :- ** : Bihar - Includes ` 15 per quintal transport charge for mill gate supply.
^ : Bihar - Includes `5 per quintal as bonus to be paid by State Govt.
* : UP - Mill will pay ` 240/- per qtl. as Ist installment to the farmers & IInd installment of ` 40/- per qtl. will
be paid within three months from the closure of the crushing season.

Price Policy
for
Sugarcane
Annex Table 1.4: Intra-Regional Variation in Sugar Recovery
Rates in Uttar Pradesh
Region No. of Mills with Recovery <=10% No.of Mills with Recovery >10%
Private Co-operative Private Co-operative
Bareilly (Badaun, Kasganj, 2 (8.95) 5 (9.20) 9 (10.76) 1 (10.90)
Pilibhit, Bareilly, Shahjahanpur)
Deoria (Deoria, Kushinagar, 1 (9.0) 2 (8.74) 5 (10.71) 0
Mau, Azamgarh)
Devipatnam (Behraich, 4 (9.61) 0 5 (10.62) 1 (10.50)
Balrampur, Gonda)
Faizabad (Barabanki, Faizabad, 2 (9.74) 1 (7.87) 2 (10.83) 0
Ambedkarnagar, Sultanpur)
Gorakhpur (Maharajganj, Basti) 3 (8.86) 0 2 (10.33) 0
Annex Tables
Lucknow (Lakhimpur, Sitapur, 1 (9.83) 4 (9.11) 13 (11.15) 0

Hardoi, Farrukhabad)
Meerut (Meerut, Bulandshahar, 2 (9.75) 3 (9.31) 10 (11.07) 0
Baghpat, Hapur, Ghaziabad)
Moradabad (Moradabad, 2 (9.81) 0 17 (11.44) 0
Rampur, Sambhal, Bijnor,
amroha)
Saharanpur (Muzzafarnagar, 0 1 (9.73) 14 (10.94) 2 (10.53)
Saharanpur, Shamli)
Uttar Pradesh 17 (9.44) 16 (8.99) 77 (10.87) 4 (10.92)
Note : *Figures in parantheses are recovery rates
Source: Govt of Uttar Pradesh

Price Policy
for
Sugarcane
Annex Table 1.5: Intra-Regional Variation in Sugar Recovery
Rates in Maharashtra
Region No. of Mills with Recovery <=10% No.of Mills with Recovery >10%
Private Co-operative Private Co-operative
Varhad (Yavatmal) 0 0 1 (11.15) 1 (10.28)
Marathwada (Aurangabad, 8 (8.39) 7 (9.25) 13 (10.61) 13 (10.78)
Beed, Parbhani, Latur,
Osmanabad, Hingoli)
Vidarbha (Bandhara, Nagpur, 3(9.81) 0 1 (10.27) 0
Wardha
Khandesh 2 (9.65) 6 (8.95) 4 (10.98) 13 (11.12)
(Ahmednagar,Nandurbar,
Nasik, Jalgaon)
Desh (Kohlapur, Pune, Satara, 4 (9.78) 7 (9.38) 32 (11.34) 51 (11.78)
Sangli, Solapur)
Annex Tables
Maharashtra 17 (9.41) 20 (9.20) 51 (10.87) 78 (10.99)
Note : *Figures in parantheses are recovery rates
Source: DFPD

Price Policy
for
Sugarcane
Annex Table 1.6: Comparative Analysis of Losses in Different Varieties of Sugarcane
due to Mechanical Harvesting vis-à-vis Manual Harvesting
Variety Manual harvest Mechanical harvest
Brix Pol Purity CCS Expected Brix Pol Purity CCS Expected
(%) (%) (%) (%) Recovery (%) (%) (%) (%) Recovery
(%) (%)
Co 86032 20.43 18.6 91.06 11.95 19.22 17.13 89.06 12.85 10.85
19.4 17.08 88.04 12.81 10.81 18.23 15.31 83.97 11.48 9.48
22.11 19.12 86.48 14.34 12.34 21.29 18.17 85.37 13.63 11.63
Average 20.65 18.27 88.53 13.7 11.7 19.58 16.87 86.13 12.65 10.65
Co 91010 19.88 16.85 84.68 12.64 10.64 17.52 13.78 78.66 10.33 8.33
18.5 15.6 84.33 11.7 9.7 18.4 14.53 78.95 10.9 8.9
Annex Tables
Average 19.19 16.23 84.51 12.17 10.17 17.96 14.15 78.81 10.61 8.61
CoC 671 22.93 20.96 91.52 15.72 13.72 21.27 19.72 92.73 14.79 12.79
Overall 20.54 18.03 87.69 13.53 11.53 19.32 16.44 84.79 12.33 10.33
Average
Source : NSI, Belagavi, Karnataka.

Price Policy
for
Sugarcane
Annex Table 2.1: Ex-Mill Prices of Sugar in
Major Sugar Producing States
State 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-18
10 11 12 13 14 15 16 17 (upto June)
Uttar Pradesh 3122 2807 3076 3203 3110 2578 3207 3649 3246
Maharashtra 2890 2593 2860 2989 2760 2340 3045 3515 3045
Andhra Pradesh 2971 2668 2915 3088 2890 2460 3127 3658 3162
Tamil Nadu 2955 2647 2891 3046 2872 2454 3183 3623 3293
Gujarat 2960 2673 2951 3065 2843 2404 3064 3615 3196
Punjab 3131 2658 2890 3138 3037 2575 3195 3688 3274
Karnataka 2834 2572 2849 2978 2733 2318 3035 3516 3068
All-India 2980 2660 2919 3072 2892 2447 3122 3609 3183
Source: Directorate of Sugar
Annex Tables

Annex Tables
for
Sugarcane
62
Price Policy
Annex Table 2.2: State-wise Sugar Recovery

(%)
State/Year AP Bihar Gujarat Haryana Karnataka MH Punjab TN Telangana UP Uttarakhand All India
1999-00 10.09 9.20 10.61 9.27 10.65 11.39 9.10 9.20 9.34 10.20
2000-01 10.36 9.11 10.42 9.80 10.75 11.63 9.70 9.64 9.71 10.48
2001-02 10.01 8.82 10.79 9.95 10.72 11.60 9.45 9.61 9.53 9.42 10.27
2002-03 10.15 9.05 10.58 10.13 10.80 11.68 9.72 9.87 9.54 9.47 10.38
2003-04 10.32 9.33 10.93 10.47 10.21 10.93 9.72 9.92 9.82 9.75 10.22
2004-05 10.65 9.58 10.76 10.16 10.11 11.39 9.79 9.64 9.79 9.63 10.17
2005-06 10.05 9.48 10.82 9.78 10.83 11.66 9.19 9.24 9.49 9.42 10.22
2006-07 9.69 8.67 10.68 9.74 10.69 11.39 9.54 9.31 9.49 9.54 10.16
2007-08 10.10 9.20 10.90 9.90 10.10 11.80 9.30 9.30 9.30 9.80 10.30
2008-09 9.88 9.30 9.50 9.05 10.30 11.52 9.33 9.56 8.91 9.20 10.05
2009-10 9.28 9.49 10.52 9.37 10.67 11.51 8.59 8.94 9.13 9.19 10.20
2010-11 9.77 9.30 9.99 9.02 10.92 11.30 8.80 9.10 9.15 9.34 10.17
2019-20 Sugar Season

2011-12 9.80 9.10 10.61 9.07 11.18 11.67 9.12 9.35 9.08 9.10 10.26
2012-13 9.65 8.91 10.77 9.76 10.42 11.45 9.09 8.88 9.17 9.19 10.01
2013-14 9.77 9.40 11.11 9.40 10.98 11.24 9.40 9.00 9.44 9.23 10.25
2014-15 9.72 9.10 10.48 9.89 10.90 11.67 9.37 8.10 10.47 9.49 9.15 10.44
2015-16 9.31 9.69 10.37 9.39 10.59 11.19 10.01 8.47 10.83 10.51 9.52 10.51
2016-17 9.34 9.08 10.56 10.19 10.28 11.19 9.34 9.08 10.33 10.26 8.20 10.25
2017-18 9.56 9.30 10.20 10.45 10.61 11.25 9.78 8.03 10.84 10.85 9.40 10.73
Annex Table 4.1: World Sugar Projections
World Unit Average 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
2015-17 (E)
SUGARBEET
Production Mt 272.6 291.5 292.9 289.9 289 289.7 290.1 291 292.3 293.6 295
Area Mha 4.6 4.9 4.8 4.8 4.7 4.7 4.7 4.7 4.7 4.7 4.7
Yield t/ha 59.51 60 60.5 60.63 60.91 61.2 61.47 61.69 61.97 62.23 62.52
Bio-fuel use Mt 13.8 15.2 15.1 14.9 14.7 14.7 14.8 14.8 14.8 14.8 14.8
SUGARCANE
Production Mt 1873.7 1919.1 1943.3 1957.5 1990.7 2012.1 2034.4 2055.3 2073.7 2092.4 2111.4
Area Mha 27.3 27.8 28 28.1 28.3 28.5 28.6 28.8 28.9 29 29.2
Yield t/ha 68.75 68.96 69.45 69.58 70.37 70.68 71.05 71.42 71.74 72.09 72.42

Bio-fuel use Mt 348.6 353.8 363.5 369.7 376.2 382.3 389 395.5 400.7 405.6 410.4
SUGAR
Production Mt tq 170.7 178.6 182.1 184.8 188.6 191.2 193.8 196.5 199.1 201.9 204.7
Consumption Mt tq 167.1 173.4 176 178.7 181.4 184.1 186.9 189.6 192.4 195.1 197.9
Closing stocks Mt tq 78.9 78.2 78.3 78.5 79.6 80.7 81.7 82.6 83.4 84.2 85.1
Price, raw sugar USD/t 359.7 346.9 352.7 357.4 362.9 367.8 372.6 377.7 383.2 388.1 392.3
Price, white sugar USD/t 442.7 417.3 434 437.8 443 448.1 452.7 457.3 462.4 467.3 471.7
Price, HFCS USD/t 613.8 503.7 519.5 526.8 538.4 546.5 551.8 555.2 560.6 566.2 572.1
HFCS: High Fructose Corn Syrup
Source: OECD/FAO (2018), “OECD-FAO Agricultural Outlook”, OECD Agriculture statistics (database)
63
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Annex Tables
for
Sugarcane
64
Price Policy
Annex Table 4.2: Top Ten Export Destinations of Indian Sugar
(in ` Lakh)
2017-18 2016-17 2015-16 2014-15 2013-14
Country Value % share Country Value % share Country Value % share Country Value % share Country Value % share
Sudan 128,249.02 24.73 Myanmar 284,414.00 32.99 Myanmar 307,457.11 31.41 Sudan 125,960.13 23.78 Sudan 142,102.41 19.87
Somalia 82,377.27 15.89 Somalia 123,457.90 14.32 Somalia 124,562.71 12.73 Somalia 82,527.97 15.58 Iran 107,213.36 14.99
UAE 59,388.91 11.45 Sudan 103,437.97 12.00 Sudan 108,181.06 11.05 UAE 57,250.07 10.81 Sri Lanka 78,987.20 11.04
Myanmar 43,203.01 8.33 Djibouti 70,236.98 8.15 Sri Lanka 59,435.76 6.07 Sri Lanka 42,463.66 8.02 UAE 62,760.70 8.78
Bangladesh 22,544.38 4.35 UAE 39,414.14 4.57 UAE 38,508.64 3.93 Iran 31,166.62 5.88 Somalia 52,792.63 7.38
Saudi Arabia 20,515.83 3.96 Kenya 29,702.61 3.45 Tanzania 30,251.51 3.09 Saudi Arabia 24,061.80 4.54 Saudi 39,056.34 5.46
Arabia

Kenya 20,124.36 3.88 Pakistan 28,446.05 3.30 Kenya 28,149.67 2.88 Bangladesh 23,664.61 4.47 Tanzania 33,172.48 4.64
Djibouti 17,830.64 3.44 Saudi Arabia 25,244.64 2.93 Pakistan 27,732.24 2.83 Tanzania 20,102.69 3.80 Jordan 21,197.18 2.96
Nepal 16,335.25 3.15 Sri Lanka 22,578.55 2.62 Saudi Arabia 26,518.24 2.71 Djibouti 19,416.00 3.67 Oman 21,079.47 2.95
Sri Lanka 15,092.18 2.91 Tanzania 19,183.70 2.23 Jordan 18,085.82 1.85 Iraq 19,190.75 3.62 Yemen 12,963.82 1.81
Others 92,879.16 17.91 Others 116,045.21 13.46 Others 209912.36 21.45 Others 83,848.76 15.83 Others 143,891.77 20.12
Total 518,540.01 100.00 Total 862,161.75 100.00 Total 978,795.12 100.00 Total 529,653.06 100.00 Total 715,217.36 100.00
Note: Commodity: 1701 Cane/Beet Sugar Chemically Pure Sucrose In Solid Unit

Source: DGCIS
Annex Table 4.3: Top Ten Sources of India's Sugar Imports
(in ` Lakh)
2017-18 2016-17 2015-16 2014-15 2013-14
Country Value % Country Value % share Country Value % share Country Value % share Country Value % share
share
Brazil 592,731.96 98.51 Brazil 682,549.30 99.65 Brazil 398,837.61 99.44 Brazil 363,165.69 99.63 Brazil 223,119.53 97.89
Pakistan 3,017.79 0.50 USA 857.67 0.13 UK 591.38 0.15 Italy 400.31 0.11 Pakistan 3,558.31 1.56
UAE 2,686.23 0.45 Italy 458.38 0.07 New Zealand 364.5 0.09 USA 344.65 0.09 Germany 420.75 0.18
Germany 1,601.26 0.27 UK 321.59 0.05 USA 352.81 0.09 Germany 188.17 0.05 Italy 270.99 0.12
USA 632.31 0.11 New Zealand 260.18 0.04 Italy 216.7 0.05 China 142.88 0.04 USA 181.99 0.08

Italy 368.72 0.06 Germany 205.47 0.03 Germany 208.94 0.05 France 68.17 0.02 China 152.42 0.07
Denmark 211.1 0.04 France 130.94 0.02 China 202.38 0.05 UAE 47.8 0.01 UK 71.3 0.03
France 142.19 0.02 China 65.63 0.01 Korea 97.15 0.02 UK 44.76 0.01 UAE 51.28 0.02
UK 104.49 0.02 UAE 54.23 0.01 France 63.98 0.02 Israel 41.85 0.01 Japan 29.45 0.01
New Zea- 79.22 0.01 Canada 29.82 0.00 Australia 59.48 0.01 Netherland 30.19 0.01 France 26.76 0.01
land
Others 146.93 0.02 Others 175.65 0.03 Others 107.92 0.03 Others 40.96 0.01 Others 38.96 0.02
Total 601,722.20 100.00 Total 684,963.22 100.00 Total 401,102.85 100.00 Total 364,515.43 100.00 Total 227,921.74 100.00
Note: Commodity: 1701 Cane/Beet Sugar Chemically Pure Sucrose In Solid Unit

Source: DGCIS
65
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Annex Tables
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Price Policy
Price Policy
for
Sugarcane
Annex Table 5.1: Month-wise and State-wise Average Daily Wage Rates for
(`/Day)
Year/Month AP Bih Guj Har Kar MH TN UP All-India

2014
January 229 194 172 320 237 215 355 191 224
February 226 200 172 329 240 214 362 191 225
March 222 202 175 333 243 219 356 195 226
April 222 204 179 335 240 223 361 201 229
May 225 206 179 346 242 223 364 202 231
June 217 207 179 347 241 230 362 199 230
July 230 218 185 345 241 225 372 200 234
August 226 220 190 348 241 226 371 202 235
September 239 220 190 350 242 222 417 198 239
October 241 222 198 354 242 222 412 201 241
Annex Tables
November 247 220 198 357 244 223 421 199 242
December 236 220 192 344 252 222 417 199 240
2015
January 246 219 194 338 254 225 430 200 244
February 250 221 194 335 252 225 440 202 246
March 245 228 194 341 253 226 429 205 246
April 245 230 195 340 253 231 403 209 245
May 235 231 196 345 260 232 405 208 246
June 239 237 196 346 260 228 399 207 246
July 229 242 203 350 269 234 393 211 248
August 241 246 203 355 277 233 404 214 253
September 241 246 203 354 278 228 394 214 251
October 240 244 203 354 279 233 392 215 252
November 276 243 203 351 285 228 382 216 256
December 278 245 203 361 286 229 383 219 258
2016
January 276 248 206 354 285 231 381 218 258
February 254 248 206 359 281 229 383 217 254
March 250 246 213 359 280 231 406 217 256
April 272 246 214 362 278 232 406 223 260
May 256 248 214 368 283 247 400 223 262
June 254 249 214 368 288 249 396 222 262
July 257 251 219 368 295 238 408 225 263
August 262 252 219 368 293 246 411 225 266
September 263 247 219 368 293 248 412 221 265
October 263 247 219 368 290 249 409 221 265
November 271 247 219 368 297 255 406 227 269
December 284 247 219 368 298 255 406 225 271
(Continued)

Price Policy
for
Sugarcane
Annex Table 5.1: Month-wise and State-wise Average Daily Wage Rates for
(`/Day)
Year/Month AP Bih Guj Har Kar MH TN UP All-India

2017
January 286 249 225 362 303 255 412 226 273
February 286 251 227 363 302 259 413 229 275
March 290 250 227 363 300 262 413 231 276
April 291 251 229 361 300 269 413 270 285
May 288 251 229 363 301 275 413 232 279
June 269 251 229 363 300 280 410 233 277
July 281 255 230 373 301 277 415 241 281
August 276 258 230 365 305 271 412 247 281
September 280 260 234 365 306 265 416 248 281
October 277 259 234 367 306 265 416 246 280
November 282 261 234 367 310 269 417 244 282
Annex Tables
December 291 262 234 367 315 268 417 243 284
2018
January 312 264 236 367 321 268 424 243 289
February 308 269 236 367 322 267 444 243 291
March 320 270 238 368 320 273 445 240 293
April 321 271 238 367 322 272 445 239 293
May 327 269 238 368 324 277 445 240 295
Note: Daily Wage rate - Average of five operations i.e. Ploughing, Sowing, Weeding, Transplanting and Harvesting
Source: Labour Bureau, Ministry of Labour & Employment, Government of India

Price Policy
for
Sugarcane
Annex Table 5.2: Farm Inputs - Wholesale Price Index (Base 2011-12=100)
Year/Month High Fertilizers Electricity Agricultural Lube Cattle Fodder Pesticides and
Speed and nitrogen tractors Oils Feed other
Diesel compounds agrochemical
(HSD) products
Average-October to May
2012-13 112.4 115.2 101.2 104.8 110.8 133.2 125.2 107.8
2013-14 131.3 117.0 104.9 105.0 115.7 142.9 144.6 114.5
2014-15 96.3 119.8 107.2 108.5 120.2 139.2 149.5 121.5
2015-16 63.5 121.5 103.5 112.2 120.8 152.8 170.2 121.0
2016-17 80.3 117.2 105.0 113.8 114.7 157.2 162.3 116.5
2017-18 89.5 117.8 104.7 114.5 115.2 153.4 138.3 115.6
2012
April 111.9 108.1 97.4 103.9 106.0 106.7 107.9 105.9
May 111.5 109.7 100.8 103.9 106.0 109.8 105.3 106.4
June 109.6 111.8 102.5 104.1 110.3 112.6 101.7 106.1
July 108.5 113.5 101.8 103.8 110.3 118.3 107.0 106.5
Annex Tables
August 111.0 113.6 98.5 104.2 110.3 123.3 111.3 107.9

September 114.3 114.5 97.4 104.0 110.3 128.7 118.6 109.1
October 108.4 114.6 101.4 104.7 110.3 131.1 122.8 108.3
November 108.0 115.4 101.6 104.6 110.3 131.9 125.0 108.9
December 108.1 114.9 101.3 104.7 110.3 130.9 124.9 108.1
2013
January 112.0 114.6 104.5 104.7 110.3 129.7 121.9 107.5
February 117.6 114.9 100.6 104.9 110.3 130.5 127.4 107.3
March 118.4 116.1 98.2 105.1 110.3 133.8 128.9 107.5
April 114.6 115.3 101.1 105.9 112.1 138.2 126.3 109.1
May 112.1 115.4 101.0 103.6 112.1 139.5 124.7 105.4
June 117.1 116.2 101.5 104.1 112.1 140.0 131.9 107.0
July 123.4 116.7 102.3 104.1 112.1 140.2 136.2 109.7
August 126.3 116.5 103.1 103.9 115.3 140.4 137.1 111.1
September 132.8 116.7 104.6 104.3 115.3 142.0 138.2 112.3
October 130.1 116.4 103.3 104.7 115.3 142.8 138.6 113.0
November 130.3 116.8 103.1 104.6 115.3 143.4 140.2 113.1
December 132.5 116.6 105.6 104.1 115.3 142.3 141.6 113.8
2014
January 131.8 116.7 105.8 104.3 115.3 140.6 144.3 113.2
February 131.6 117.0 105.9 104.4 115.3 140.8 149.5 110.9
March 133.1 117.7 106.4 104.8 115.3 141.8 156.0 115.1
April 130.0 116.9 106.0 106.3 117.0 144.0 147.5 118.6
May 131.2 117.8 102.7 106.7 117.0 147.5 139.3 118.6
June 129.0 118.6 101.9 106.4 117.0 146.6 142.3 120.7
July 131.6 118.6 102.7 107.0 117.0 146.0 142.0 120.3
August 130.9 118.6 106.1 106.8 117.0 144.2 145.5 118.3
September 129.6 118.8 104.9 106.9 120.0 141.5 154.1 124.0
October 125.8 119.1 104.3 107.1 120.0 138.9 155.0 121.9
November 112.7 119.4 106.5 107.1 120.0 137.1 156.1 121.9
December 103.5 119.6 108.4 107.6 120.0 137.2 156.9 118.6
(Continued)

Price Policy
for
Sugarcane
Annex Table 5.2: Farm Inputs - Wholesale Price Index (Base 2011-12=100)
Year/Month High Fertilizers Electricity Agricultural Lube Cattle Fodder Pesticides and
Speed and nitrogen tractors Oils Feed other
Diesel compounds agrochemical
(HSD) products
2015
January 87.9 119.0 109.1 108.0 120.0 138.4 155.8 122.9
February 79.1 119.5 107.8 108.1 120.0 139.0 150.8 122.5
March 86.6 120.3 107.5 108.1 120.1 138.7 143.1 119.6
April 83.3 120.5 108.0 111.0 120.8 140.8 139.5 121.6
May 91.7 120.9 106.1 110.9 120.8 143.5 138.4 122.9
June 92.7 120.7 105.9 111.0 120.8 144.8 142.8 122.7
July 86.5 120.9 106.5 111.3 120.8 145.0 150.5 124.9
August 73.1 121.7 105.4 110.9 120.8 147.2 165.9 122.7
September 71.3 122.3 106.3 110.7 120.8 148.8 166.6 123.6
October 73.8 122.1 103.1 111.8 120.8 150.6 168.7 124.1
November 74.2 121.4 104.5 111.9 120.8 150.4 172.9 123.1
December 72.3 121.4 104.9 111.9 120.8 150.3 176.2 121.6
2016
January 57.1 121.6 105.9 111.7 120.8 151.3 173.3 122.6
Annex Tables
February 50.3 121.6 103.5 111.7 120.8 153.8 170.3 121.8
March 54.9 121.3 102.9 111.9 120.8 154.4 171.6 119.5
April 59.1 121.3 101.1 113.7 120.8 155.4 167.1 116.7
May 66.5 121.1 102.2 113.0 120.8 155.9 161.4 118.8
June 75.0 121.0 102.8 113.0 120.8 158.9 170.2 117.7
July 74.7 120.3 102.7 113.1 120.8 161.3 170.1 117.1
August 67.0 119.1 103.2 113.6 114.8 161.8 162.7 116.0
September 70.7 118.3 103.8 113.9 114.8 160.9 162.9 116.5
October 72.6 118.3 103.9 113.8 114.8 159.0 165.4 115.3
November 76.5 117.8 105.9 113.8 114.8 158.6 163.5 115.3
December 77.3 116.7 106.2 113.5 114.8 157.9 163.5 115.5
2017
January 83.4 117.0 107.9 113.8 114.8 157.3 163.0 117.9
February 85.0 116.7 107.4 114.2 114.8 157.6 165.9 117.0
March 84.9 116.8 102.7 113.3 114.8 155.2 159.8 117.2
April 81.5 117.1 103.3 114.0 114.8 155.7 159.5 116.8
May 81.3 117.2 102.8 114.0 114.0 156.4 157.4 117.2
June 80.0 116.4 102.0 114.3 113.3 155.4 157.2 116.9
July 78.8 116.0 102.0 113.5 112.9 154.5 162.4 115.3
August 80.9 116.5 100.6 114.1 112.9 154.6 163.1 114.9
September 82.5 116.5 106.1 114.5 112.9 154.9 160.2 113.7
October 84.5 116.8 106.1 114.3 112.9 154.0 154.7 112.9
November 85.8 116.7 102.7 114.0 112.9 152.9 143.9 114.0
December 87.1 116.8 102.4 113.8 112.9 151.2 132.7 114.8
2018
January 89.5 117.4 105.0 114.4 114.0 150.6 132.3 115.3
February 91.3 118.6 105.4 114.3 117.3 154.3 134.3 114.8
March 90.1 118.9 105.4 115.3 117.3 154.4 136.3 117.0
April 92.5 118.3 104.9 115.4 117.3 154.7 137.0 118.2
May 95.4 119.0 105.4 114.7 117.3 154.9 135.2 117.9
June 97.3 118.6 109.6 114.6 117.3 154.7 134.6 119.9
% change of 11.5 0.5 -0.3 0.6 0.5 -2.4 -14.8 -0.8
Oct.2017 to
May 2018
over
Oct.2016 to
May 2017
Source : Office of the Economic Adviser, Ministry of Commerce and Industry

Price Policy
for
Sugarcane
Annex Table 5.3 : Sugarcane: Break-up of cost of Cultivation
(`/ha.)
Cost Items Andhra Pradesh Karnataka Maharashtra

2016-17 2015-16 2016-17 2015-16 2016-17 2015-16
Operational Cost 113011.71 117673.54 74948.00 66679.40 103861.42 141436.69
Human Labour
Casual 60936.76 63897.60 26518.06 23821.10 23620.37 33756.46
Attached 297.41 612.16 0.00 0.00 769.43 995.00
Family 17641.04 16132.31 13752.15 13523.41 17578.90 25462.15
Total 78875.21 80642.07 40270.21 37344.51 41968.70 60213.61
Bullock Labour
Hired 2124.22 919.48 1136.31 1440.71 3549.31 4090.96
Owned 395.64 577.70 2655.06 1143.11 1203.54 1391.01
Total 2519.86 1497.18 3791.37 2583.82 4752.85 5481.97
Annex Tables
Machine Labour
Hired 1265.53 1676.56 446.74 1061.04 16243.88 22334.85
Owned 60.12 29.56 86.41 37.78 603.66 867.44
Total 1325.65 1706.12 533.15 1098.82 16847.54 23202.29
Seed 9512.19 8745.85 734.87 1073.29 3082.41 7544.21
Fertilisers and Manure
Fertilisers 8595.87 14687.75 15504.70 12606.50 14553.98 18474.93
Manure 1119.43 500.18 1143.75 975.02 1498.29 3796.47
Total 9715.30 15187.93 16648.45 13581.52 16052.27 22271.40
Insecticides 1058.73 1285.71 181.61 134.55 505.21 678.23
Irrigation charges 4394.73 2635.67 9188.58 7736.06 15577.00 15222.94
Interest on working 5610.04 5973.01 3599.76 3126.83 5075.44 6822.04
capital
Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00
Fixed Cost 68911.99 68358.06 59662.20 36027.80 50672.88 48986.21
Rental value of owned 64519.96 62812.73 53351.73 31445.65 34326.20 32424.51
land
Rent paid for leased-in 0.00 2015.27 0.00 0.00 0.00 0.00
land
Land revenue,cesses & 0.00 0.00 13.97 17.71 351.89 346.17
taxes
Depreciation on imple- 428.21 402.56 373.93 295.34 1260.02 1231.63
ments & Farm buildings
Interest on fixed capital 3963.82 3127.50 5922.57 4269.10 14734.77 14983.90
Total Cost 181923.70 186031.60 134610.20 102707.20 154534.30 190422.90
(Contd..)

Price Policy
for
Sugarcane
Annex Table 5.3 : Sugarcane: Break-up of cost of Cultivation
(`/ha.)
Cost Items Tamil Nadu Uttar Pradesh Uttarakhand

2016-17 2015-16 2016-17 2015-16 2016-17 2015-16
Operational Cost 133305.39 137266.26 50918.32 54664.46 53063.59 48817.05
Human Labour
Casual 65771.56 68203.55 16842.99 15565.83 20734.74 17253.05
Attached 2645.03 2145.72 48.31 60.32 114.71 144.58
Family 21336.38 21153.29 14702.03 14194.08 13447.84 10646.83
Total 89752.97 91502.56 31593.33 29820.23 34297.29 28044.46
Bullock Labour
Hired 1279.24 680.08 92.89 22.16 229.59 164.36
Owned 18.90 8.50 662.66 320.81 386.43 339.82
Total 1298.14 688.58 755.55 342.97 616.02 504.18
Machine Labour
Annex Tables
Hired 3848.54 3375.41 1046.98 2121.95 525.63 0.00
Owned 1115.36 414.34 316.00 368.14 1038.67 1077.72
Total 4963.90 3789.75 1362.98 2490.09 1564.30 1077.72
Seed 5336.72 9692.94 4873.65 8569.82 7117.36 7866.96
Fertilisers and Manure
Fertilisers 10074.93 11154.39 3628.69 4207.96 2386.22 2586.30
Manure 2770.67 4055.00 266.82 835.63 25.03 1806.19
Total 12845.60 15209.39 3895.51 5043.59 2411.25 4392.49
Insecticides 839.25 819.84 973.18 511.00 3.76 608.21
Irrigation charges 11682.39 8692.81 5259.05 5506.15 4723.27 4077.72
Interest on working 6586.42 6830.17 2130.37 2380.61 2330.34 2245.31
capital
Miscellaneous 0.00 40.22 74.70 0.00 0.00 0.00
Fixed Cost 46081.61 39673.04 47550.71 45670.24 51876.21 44204.50
Rental value of owned 35237.54 27926.99 39408.34 36679.10 45780.92 38462.35
land
Rent paid for leased-in 266.21 138.85 291.80 290.92 0.00 0.00
land
Land revenue,cesses & 12.85 12.51 12.37 13.41 23.30 16.98
taxes
Depreciation on imple- 726.22 773.49 1761.06 1890.49 958.06 912.64
ments & Farm buildings
Interest on fixed capital 9838.79 10821.20 6077.14 6796.32 5113.93 4812.53
Total Cost 179387.00 176939.30 98469.03 100334.70 104939.80 93021.55
Source: Directorate of Economics and Statistics

Price Policy
for
Sugarcane
Annex Table 5.4: All-India Projected Costs of Production of Sugarcane
for 2018-19 over 2017-18
States State-Specific Cost of Production (`/qtl) Percentage Change in Projected

Cost (2018-19 over 2017-18)
2017-18 2018-19
A2+FL C2 A2+FL C2 A2+FL C2
Andhra Pradesh 176 257 181 260 2.8 1.2
Karnataka 131 183 133 188 1.5 2.7
Maharashtra 155 200 164 214 5.8 7.0
Tamil Nadu 176 214 182 223 3.4 4.2
Uttar Pradesh 161 237 165 243 2.5 2.5
Uttarakhand 125 202 126 212 0.8 5.0
Annex Tables
All India Weighted 157 219 162 229 3.2 4.6

Average

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Preface and Acknowledgements

Preparation of this report required the concerted efforts of a number of individuals

August 2018 (Vijay Paul Sharma)

2019-20 Sugar Season v

Improved Technology and Practices 25

vi 2019-20 Sugar Season

2019-20 Sugar Season vii

Chart 2.3 Trends in Average ex-Mill Prices of Sugar in Major Producing 11

viii 2019-20 Sugar Season

2019-20 Sugar Season ix

Table No. Title Page No.

Table 1.1 State-wise Details of Cane Price Arrears during 2017-18 3

Table 2.2 World Sugar Balance Sheet 11

Table 2.3 FRP and RSF payable during 2010-11 to 2017-18 14

Table 3.1 Compound Annual Growth Rate and Coefficient of Variation of 20

Table 3.2 Annual Growth Rate of Sugarcane, 2010-11 to 2017-18 22

Table 3.3 District-level Productivity Trends of Sugarcane 23

Table 5.1 Average Gross Returns of Sugarcane, TE2016-17 39

Table 5.3 Projected CoP of Sugarcane, Sugar Season 2019-20 44

x 2019-20 Sugar Season

Table No. Title Page No.

2019-20 Sugar Season xi

A2 Actual paid out cost

land and capital

xii 2019-20 Sugar Season

2019-20 Sugar Season xiii

Price Policy Recommendations

SAP vis-à-vis FRP: Market Distortions

xiv 2019-20 Sugar Season

Payment of Dues to Sugarcane Growers

Incentivising Sugar Recovery

2019-20 Sugar Season xv

Cane Area Reservation and Minimum Distance Criterion

Crop Diversification and Intercropping

Mechanisation of Sugarcane Cultivation

xvi 2019-20 Sugar Season

Production and Consumption

2019-20 Sugar Season 1

Source: Directorate of Sugar (DFPD)

2 2019-20 Sugar Season

Table 1.1: State-wise Details of Cane Price Arrears during 2017-18

3. Karnataka 1,046 4. Punjab 788

7. Uttarakhand 612 8. Gujarat 601

9. Tamil Nadu 187 10. Telangana 109

Source: Directorate of Sugar (DFPD)

2019-20 Sugar Season 3

Payment to Sugarcane Growers

4 2019-20 Sugar Season

Incentivising Efficiency: Benefit Sharing between Farmers and Mills

2019-20 Sugar Season 5

Crop Diversification and Intercropping

Mechanisation of Sugarcane Cultivation

6 2019-20 Sugar Season

2019-20 Sugar Season 7

Demand-Supply and Pricing Policy

8 2019-20 Sugar Season

Demand-Supply and Pricing Policy

Source: Directorate of Sugar (DFPD)

2019-20 Sugar Season 9

Particulars 2014-15 2015-16 2016-17 2017-18#

10 2019-20 Sugar Season