Rising consumption, decaying profits: India’s sugar story

As the global demand for sugar rises, it comes with high costs to health, environment and livelihoods.

Mandya/Bengaluru: Standing amidst the long blades of sugarcane in Maddur’s Sollepura, Prakash, a farmer, points to the tips of the commercial crop. Crowning the stalks are feathery, burgundy-hued flowers —  the objects of his concern. Although the flowers are essential for propagation, for cultivators, they are omens of impending loss.

“The sugarcane crop is to be harvested within a year, as soon as it reaches maturity. This batch has not been harvested for over 14 months. With every passing day, the sugar content declines. Yet, the sugar factory has not issued cutting orders,” he says.

Processing sugarcane is acutely time-sensitive. Delays in the supply chain can lead to the loss of sucrose content but are common because of high processing loads. This issue, Prakash says, is common in Indian sugar supply chains. “The FRP (fair remunerative price) fixed by the central government is dependent on the recovery of sugar by the factories,” he says.

At 30 million metric tonnes, the demand for sugar has reached an all-time high in the country, driven by use in sectors such as food, beverages and biofuels. India’s annual sugar consumption growth rate (2.2 per cent) is substantially higher than the global average (1 per cent). The importance of sugar in domestic and global markets means that essential soil, water and other agricultural resources are diverted towards sugarcane cultivation, even if this leads to great economic and ecological costs. 

Rising input, harvesting and transport costs, degrading soil quality, unpredictable monsoons and stagnating prices for sugar have contributed to agrarian distress in sugarcane-growing states across the country. About 80% of India’s sugarcane cultivation is concentrated in three states: Uttar Pradesh, Maharashtra and Karnataka. 

A reflection of shifting consumption patterns, the growing appetite for sugar-heavy diets has led to health challenges globally. But the burden of fulfilling this demand falls disproportionately on farmers. Veteran farmer, 70-year-old Prabhulinga, likens these circumstances to modern-day colonialism. It is clear that there is great value in sugar and byproducts like ethanol and molasses, he explains. “There is such a disconnect between this demand, the pricing, the consumption and the growers. We are expected to produce in such conditions even though no one wants to solve our problems,” he adds.

 “The profits have dried up, and it seems like we have no choice, since with every other crop, there is great unpredictability with pricing. With sugarcane, we can be sure that with the FRP we can break even with input costs,” says the farmer based in Maddur.

“The cane support price is too low. It should be increased to at least Rs 500 per quintal,’’ says Bhartiya Kisan Union leader Rakesh Tikait from Uttar Pradesh.

Delayed harvesting times 

Shivamma, a 30-year-old farmer from Mandya district, could only harvest her sugarcane crop 17 months after sowing. “The stalks start withering after the crop reaches maturity. Though I would earlier get about 130 tonnes from two acres, I was only able to get half, about 60 tonnes, this year,” she says. 

As the sole provider for her family of three, she thought sugarcane farming would provide an assured income avenue. “I spent at least Rs 80,000 per acre on fertiliser, transport and harvesting labour for the crop. If I had a normal harvest, I would have had a bit of a profit and would have enough money for the rest of the year,” she explains.

The Cabinet Committee on Economic Affairs has approved an FRP of Rs 3,400 per tonne for sugarcane for the 2024-25 season, calculated at a sugar recovery rate of 10.25%. At this price, Shivamma has just about broken even, earning Rs 2 lakh for the year.

“With delays in cutting orders, farmers are only able to get in two crops in three years, because they miss the sowing window. If they plan to grow other crops, those plans are interrupted as well,” says a farmer in Karnataka.

Getting a ‘normal’ harvest has also become something of a gamble. Last year, for instance, scanty rainfall brought about a widespread ruin of crop. “There was no water from the channels as well. The crops really suffered at the time, as we have to water sugarcane at least once every 15 days during growing seasons,” says Prabhulinga.

The National Federation for Cooperative Sugar Factories (NFCSF) estimated that there would be a 35.4 per cent drop in sugar production, compared to the previous year, as the start of sugarcane crushing was delayed, with cutting orders not being issued.

At a sugar mill in Mandya, senior manager, Somashekhar H S, explains that climate variability has greatly affected cutting orders (which mills issue to farmers in order to minimise time from harvest to crushing). “Due to erratic monsoons this year, we had to delay the opening of factories. Since there are over 16,000 farmers who supply cane to the factory, we have to stagger cutting orders,” he explains.

In Karnataka, sugar production dropped to 26 lakh tonnes compared to 54 lakh tonnes the previous year, with only 40 mills operating out of a total of 78. Meanwhile, Uttar Pradesh had 85 operational mills during the same period. Maharashtra has the highest number of sugar mills at around 200.

Soil and water

Delays in harvesting have also led to chronic mono-cultivation of the commercial crop. Covering nearly five million hectares of land, the Indian Council of Agricultural Research (ICAR) highlights, in its research, that decades of continuous sugarcane monocropping have critically reduced soil fertility. A study, conducted in 2009, found that soil degradation has been linked to sugarcane yield losses ranging between 4.5% and 7.9% in the country.

In Sollepura, there has been a consistent decline in the quality of soil. “Continuous growth of sugarcane and heavy use of complex chemical fertilisers has led to increased nitrate levels in the soil,” says K V Keshavaiah, the head of the zonal agricultural research station in Mandya.

“There has been a significant reduction in organic carbon content and microbes that are essential in nutrient cycling. As a result, the accumulation of sucrose content in the cane is limited and yield reduces over time,” he adds.

Indiscriminate inundation of crops is also a common problem observed in sugarcane-growing districts. “This is common in regions with surface water irrigation. Leaving fields inundated with water in summer causes soil salinity and soon the area becomes unviable,” explains Keshavaiah. In Mandya, over 12,000 acres cannot be used for sugarcane cultivation due to this reason, he adds.

Sugarcane is a water-guzzling crop, needing anywhere between 1,500 to 3,000 mm of rainfall, distributed over the growing season. On average, 1 kg of sugar requires about 1,500 to 2,000 kg of water.

“The use of water resources in cultivation is a critical topic of discussion, when we talk of climate change and sugarcane cultivation. The area under sugarcane cultivation is rather very small – maybe 4 per cent of the cultivated area in Maharashtra. But it uses about 70 per cent of the irrigation water. This deprives other crops of irrigation water and is one of the main reasons for low irrigation coverage in Maharashtra,” says K J Joy, researcher and co-founder of the Society for Promoting Participative Ecosystem Management, Pune.

In Uttar Pradesh too, cane farmers face numerous challenges with inadequate irrigation facilities, low support prices, and delayed payments from sugar mills. “Often, there is no water in the canal, and as a result, the sugarcane crop suffers,” says Jag Prasad, a sugarcane farmer from Balrampur district in the top-producing state.

Uttar Pradesh, Karnataka and Maharashtra are already drought-prone, as well as groundwater-stressed. In a 2022 report, the Central Ground Water Board noted that a third of all its groundwater assessment units in Maharashtra, Uttar Pradesh and Karnataka were ‘semi-critical’, ‘critical’ or ‘overexploited’.

Global demand

According to the United States Department of Agriculture, over 180 million tonnes of sugar is produced in the world. As the largest consumer and second-largest producer of sugar in the world, India has had to deal with the problem of plenty, explains Prabhakar Kore, former director of the National Federation of Cooperative Sugar Factories Limited, New Delhi.

“India is a surplus sugar-producing country. Every year, lakhs of tonnes of stock are carried forward by factories,” he adds. To manage excess production, the country exports sugar as well.

However, in 2019, exports were largely limited after Brazil, Australia and Guatemala challenged India’s sugar subsidy measures at the World Trade Organisation, alleging that the country’s sugar subsidies to farmers were inconsistent with global trade rules.

To manage surplus, the government of India has allowed mills to produce ethanol — used in industrial solvents, fuel and the production of alcohol. The Centre has also set Ethanol Blending Programme targets, which provide for the mixing of ethanol in fuel to increase combustion efficiency.

“Strategic planning to achieve targets of ethanol blending above 20% in petrol is crucial as 2025 approaches. This initiative not only enhances energy security, but will also provide crucial support to the agricultural sector,” says P G Medhe, a sugar industry analyst based in Maharashtra.

The way forward

The sale and production of sugar are highly regulated, as it is classified as an essential commodity. Many in the industry, including farmers, say policies are in dire need of being updated. “Input and processing costs have outpaced the rate of increase in sugar prices. The export of sugar and the production of byproducts is highly regulated as well. As a result, even if factories have a surplus, they are not able to sell and there is little cash liquidity,” says Kore.

Many experts question why, in the midst of surplus production, such huge swathes of essential land, irrigation and water resources have continued to be dedicated to sugarcane cultivation.

“There is a notion that sugarcane is the lazy man’s crop,” says Prakash. “Maybe this is true. But hard work is not the problem. Farmers are ready to switch to less water-intensive crops and other horticultural crops. Many have tried. But market fluctuations mean that there is no assured income and eventually, cultivators come back to sugarcane,” he says.

There are no explicit policies in place to discourage sugar production in the country. “In Maharashtra, there are some indirect policies. For example, for any surface irrigation project, there is a designed cropping pattern and according to this, the command area under perennial crops like sugarcane should not be more than 5 per cent to 7 per cent,” says Joy.

However, designed cropping patterns are seldom adhered to. Joy puts forth that through participatory irrigation management, water users’ associations can choose their own crops. “They have to operate within the water quota fixed by the associations,” he adds.

Additionally, sustainable cultivation practices that make use of organic manure and abstain from the use of pesticides and fertilisers can help restore and maintain soil health. Drip irrigation has made inroads as well. “There are farmers who have embarked on small experiments to see if it is viable, but the change will be gradual,” says Somashekhar.

To make these programmes work, farmers say, improving accessibility to subsidies is essential. “Sugarcane farmers have long been advocating for an increase in FRP to match cultivation costs. How can we make upgrades or change cultivation methodologies when we are barely able to survive?” asks Prakash. Timely harvest and minimising other supply chain delays will help in bettering crop rotation practices and improving income.

(With inputs from Mrityunjay Bose in Mumbai and Sanjay Pandey in Lucknow)