Hit the sweet spot for boosting sugarcane productivity

Paul Singh Sidhu

PROTESTS by sugarcane growers demanding a hike in the state-advised price (SAP) and payment of arrears of previous years marked the start of the 2023-24 sugarcane crushing season in Punjab. Workers of nine cooperative sugar mills struck work demanding salary revision. Private sugar mills expressed inability to pay Rs 391/quintal SAP announced by the Punjab Government. Farm unions rejected the ‘meagre’ Rs 11 increase in the SAP. Consumers are upset over high food inflation, partly due to costly cheeni.

Sugarcane area in Punjab has been in the range of 70,000 to 120,000 hectares since 1990-91. Productivity of 82 tonnes per hectare is below the national average of 85. Sugar recovery (9.6 per cent) is below the national average. A water-intensive tropical crop, sugarcane requires warm temperatures. Compared with Tamil Nadu, Maharashtra and other states, Punjab has a disadvantage in producing sugarcane due to cold winters resulting in reduced yield and low sugar recovery. Higher productivity in Karnataka and Maharashtra is accompanied by higher sugar recovery.

Three pillars of the strategy for promoting sugarcane in Punjab are: (i) raising sugar recovery and cane yield; (ii) incentivising growers to produce better quality cane; and (iii) a predictable and stable sugar policy.

Cultivation of better quality and high-productivity varieties, adoption of modern technologies like disease-free single-bud-propagated nurseries, paired-row/trench planting and precision fertigation (water and fertiliser application using drip irrigation) have promoted the production of uniform, heavy and high-sucrose canes in Tamil Nadu and Maharashtra. These practices also shrink water and carbon footprint of sugarcane production and extraction. Three decades after the Punjab Government acquired the Jalandhar sugarcane research station for setting up a medical institute, Punjab Agricultural University has not been able to put sugarcane research back on an even keel. Focus should be on developing high sugar recovery varieties by actively involving sugar mills, and the development of a few high pay-off and climate-smart production practices instead of thinly spreading limited resources over a large number of interventions. Mechanisation of harvesting and robust seed replacement protocols are essential for improving production.

With farmers demanding higher procurement price and sugar mills asking for cheaper cane, the state government should endeavour to find a sweet spot for growers and millers. For timely and full payment to growers, mills need healthy balance sheets. As lower sugar recovery raises the milling cost, farmers should be incentivised to produce better quality cane by linking the procurement price with sugar recovery.

Several states pay a fair and remunerative price (FRP) announced by the Union Government for baseline (10.25 per cent) sugar recovery. In 2023-24, growers are being paid a premium above Rs 315/quintal FRP at the rate of Rs 3.07 for every 0.1 percentage point increase in recovery above the baseline. The FRP is reduced at the same rate for every 0.1 percentage point decrease in recovery. This mechanism has improved sugar recovery in these states.

Of Rs 391/quintal SAP, the mills are paying Rs 335 and the Punjab Government is contributing Rs 56. Thus, Punjab’s mills are paying Rs 20 per quintal above the base FRP for the cane with 0.65 percentage point lower sugar recovery. For sustaining the sugar industry, Punjab needs to transition to quality-linked procurement price.

Fifteen sugar mills (nine cooperative and six private) operational in 2023-24 have a crushing capacity of 48,700 tonnes per day. With 90,000 hectares under sugarcane cultivation, Punjab’s mills operate for 120 days in a year. A shorter crushing season and lower sugar recovery compromise competitiveness of the state’s sugar mills. Unable to meet operational costs or to upgrade infrastructure, 11 mills have closed during the past 25 years. It is imperative to enhance cane quality and production to sustain operational mills.

One private mill has prolonged the crushing season by 45 days by promoting the cultivation of sugar beet. By investing Rs 200 crore in mill modernisation, farmer support services and contract farming, it has diversified about 5,500 hectares from wheat to sugar beet. Beet growers are getting additional income of about Rs 70,000/hectare. For expanding beet area, research institutes need to develop cost-effective technologies for raising productivity and quality and utilisation of byproducts as livestock feed and soil amendment.

The sugar sector is highly regulated. Punjab’s mills are paying the highest cane price in the country but have to sell sugar and other products at the same price as the mills in well-endowed regions. The sugar mills in the country also have to comply with frequent policy changes. The Central Government paid up to Rs 10,450 per tonne to mills for exporting 24.1 million tonnes (MT) of sugar to liquidate excess inventory from 2019-20, 2020-21 and 2021-22 crop seasons and clear accumulated cane arrears of farmers. Due to banning of sugar exports in May 2023, the mills could not cash in on high global prices.

For meeting the ambitious target of 10 per cent biofuels by 2022, mills were incentivised to produce less sugar and more ethanol for blending petrol. Oil companies paid 37 and 26 per cent higher price for the ethanol produced from cane juice and B-heavy intermediate molasses, respectively, as compared with ethanol from C-heavy residual molasses in 2020-21. With a low sugar stock of 5.7 MT at the end of the 2022-23 crushing season, the mills were restricted to use only 1.7 MT (4.5 MT in 2022-23) cane juice and intermediate molasses for manufacturing ethanol and produce more sugar in 2023-24. Frequent policy changes necessitate modification of manufacturing protocols by mills.

A predictable as well as stable sugar policy and a cane price which is remunerative for farmers and profitable for mills are in the long-term interests of producers, processors and consumers.

The author is a former Senior Agriculturist, World Bank (South Asia Region)

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