Institutional

Scenario of Sugar
Sector

Dairy
development
Assignment 3

Submitted by: Group B8

Need for Institutional Presence if any for famers/suppliers to access the market

The sugar production is not that efficient because of the small-scale crushers and the
traditional methods employed that are unable to extract all the juice from the cane. Additionally,
the aggregation of the cane produces and the steady supply of cane to the sugar mills. So, there
was a high transaction cost that was involved in obtaining regular cane supplies from thousands of
independent village farmers scattered about the countryside. Moreover, institutional presence is
necessary to meet the requirements and by-product demand information availability to farmers and
credit support.

Factors to be taken care before setting up Institutes

 The decision-making system need to be made less time consuming with incorporation with
vertical hierarchy or matrix system in governance structure of cooperatives or FPOs.
 Reduced political control and auditing mechanism should be put in place in contrast to the
current structure with lesser monitoring.
 The market linkage support needs to be ensured first in the institutional setup as now the
“problem of plenty” has raised in the market.
 The laisoning and technology transfer support with accessibility need to be ensured by MoUs
etc. rather investing on setting up institutes. The risk assessment and the making of bye-laws
for the members and the autonomy, share of power to be distributed and planned initially
 The market demand forecasting and designing of extension services with cost-benefit analysis
is required before setting which is to be included in credit support systems like mechanization
schemes and interest subsidy schemes.

Current Status of Institutional Presence and Performance

 Technical: There are many national level institutes working at the zonal, state level like Sugar
breeding institute working in technology transfer, training programs, research programs on
adoption of newer techniques with sociological aspect taken into consideration. The
accessibility and the inclusion with the local cooperatives and FPOs are low as the capital cost
is high and area of operation of institutes is limited
 Credit: Many credit institutes at the district level like central cooperative banks, RRBs,
Primary agriculture cooperative society are present. The subsidy system and the Fair and
remunerative price is there for farmers but there is delay in payments due to shorter supply and
lesser domestic demand and lack of capital for exports.
 Cooperatives: Lack of monitoring have led to corruption and financial crisis. Price crash, lack
of mechanization and value addition led to weakening of the cooperative structure. The lack
of governance structure with miniscule monitoring has led to weak financial management and
delay in decision making.
 Market Linkages: The market linkages and exploration with demand forecasting is not done
by most government institutes, FPOs, Cooperatives etc. This has led to the problem of surplus
and delay in payments and acreage decrease in many states.

Recommended Forms of Institutes

 Export systems ease with help of APEDA and credit support schemes for export and the quality
improvement.
 Village linkage programs to be extended for greater reach for value added activities like ethanol
production, jaggery production etc.
 Major monitoring and auditing, demand forecasting services to cooperatives to reduce
corruption and financial management.
 For procurement, processing making standards like juice quality of sugarcane using technology
should be done by institutes like National sugar institutes.
 The principle of pump priming in management of cooperatives to be employed in case of
weaker or seasonal performance in certain regions.
 The accumulation of cooperatives and encouragement of FPOs to be generated as high capital
costs are associated.