Supply Chain Management of Sugar Derivatives

Sugar cane has been recognized as an important industrial crop. Sugarcane Seed, Nursery Development,
Cultivation, Harvesting , Milling, Production of Derivatives such as Sugar, Molasses, Bagasse, Alcohol
require Logistic Infrastructure, Planning, Implementation to maximize its Competition in WTO era of
Global/Domestic Trade. Increasing uncertainty in export commodity prices and a concurrent
Narrowing of margins in its terms of trade has challenged the Sugar industry in recent years.

Sugar industry constitutes one of the most important agro-based industries in India. It started growing
in an organized way during the 1930 after introduction of the sugar industry protection act in 1932.
Sugar industry directly provides employment to 45 million i.e., 7.5% of rural population engaged as
sugar cane farmers, agricultural laborers and dependents, employs 0.5 million skilled & semi-skilled
workers. In aggregate employment by sugar industry is generated for more than Five million persons.

By its locational feature of rural deep landmass, several self-sustaining service areas have been opened
up. No other industry can become a fountain socio-economic upswing as the sugar industry happens to
be in the rural sector. It is considered as engine of rural development and socio-economic upsurge.

In the sugar industry, management of the supply chain is changing considerably in response to the
often-difficult market environment. Market forces present real challenges to wholesalers and retailers
but are exceptionally problematic for primary producers who often lack the knowledge to manage
these new and dynamic relationships. The future of the sugar industry is reliant on retaining active
farmers, and new entrants will only be attracted if they perceive a viable long-term future.
Food manufacturers and retailers increasingly demand consistent quality and on-time products from
their suppliers. In recent years, considerable emphasis has been placed on rationalising the economic
value chain to reduce excess costs and increase efficiency.

The transport component of the sugar cane supply chain is one area where significant savings can be
realised, at a relatively low cost. “One of the main causes of the inefficiencies is the lack of a single
centre to coordinate the system holistically. In the absence of dynamic vehicle scheduling, a typical
sugarcane transport system symptomatically exhibits excessive queuing times, large numbers of no-
cane-stops, significant over fleeting and poor vehicle utilization.”

A high level of cooperation is required between farmers, harvest contractors, transport contractors and
mill managers to make sure the mill receives a steady stream of fresh cane. The logistics of when each
field of cane is harvested, and how it is transported to the mill have to be carefully coordinated.

India is the world's largest sugar consumer, accounting for about 23% of total global consumption. The
consumption of white sugar in India is generally urban based; in rural areas the alternate sweeteners
Gur and Khandasari are consumed. The per capita sugar consumption is high in the states of Punjab
followed by Haryana and Maharashtra due to higher GDP and higher income level of that states.

We have not geared up in building infrastructure facilities at Consumption places where sugar is
destined to reach and get redistributed, this has led to lot of manipulation by middlemen and Industry
losing its competitive edge and taking blame for hike in Pricing due to shortages.

Insufficient rail freight equipment at Indian ports has prevented imported sugar cargoes from reaching
their destination. A shortage of railcars has meant cargoes are being left in storage at ports, where
stockpiles are reportedly close to capacity. Grains require different infrastructure for bulk movement
and storage like Silos which is not visible at all.

The country's logistics network is currently geared towards exports. Over the coming decade,
increasing industrial output, coupled with a rapidly growing middle class are expected to drive demand
for overseas shipments of cargoes such as food items, manufactured goods, coal and crude oil.
BMI cautions that the country's logistics network is currently ill-prepared for such a dramatic shift in
trade patterns and considerable investment will be needed to modernise ports and railway networks to
manage such an increase.

A scarcity of modern, international ports is a particular concern, with only 12 large ports currently
serving a population of some 1.2bn. A massive government infrastructure spending program, aided by
the private sector, has begun but, as BMI has warned, this still may not be enough. BMI's county risk
analysts forecast India's trade to experience strong mid-term (2010-2014) growth with imports
increasing by an average of 12.86% over the period and exports growing by 13.56%.

Sugar cane is a major commercially grown agricultural crop in the vast majority of countries. It is one
of the plants having the highest bioconversion efficiency of capture of sunlight through photosynthesis
and is able to fix around 55 tons of dry matter per hectare of land under this crop on annually
renewable basis. Under current practice, 50% of this dry matter is harvested in the form of cane stalk
for sugar recovery with the fibrous fraction there from in the form of Bagasse meeting, through
combustion, energy requirements for the process. Optimize the use of Bagasse for electricity
generation and export to the grid.

Value-chain planning offers an alternative to segment-focused technical changes whose knock-on

effects are neither foreseen, nor considered. Full impact assessment through the value chain,
complete with the identification of likely first-round winners and losers, offers the opportunity to
develop a compensated, ‘win-win’ outcome by quantifying potential overall benefits and their
distribution. It is then up to the industry to make sure that benefits from new technology are shared to
secure cooperation.

Process the sugar cane crop in the most efficient manner and obtain the best possible returns for their
products; Maintain the Industry in a sound financial position; Protect and maintain the resource base
whilst minimising the industry’s effects on the environment;
Provide advice and services to growers to help improve their financial viability
and to assist with succession planning; Produce a high quality product whilst maintaining efficient
factory operations; Improve levels of safety and provide opportunities for employee Development and
Raise community awareness of the benefits of the Industry to the local community.

The use of holistic optimisation in the industry is a means by which novel and sustainable solutions can
be found by including farm management as well as representatives of other supply-chain segments in
the decision-making process. The value-chain model facilitates a “Thinking Together” approach by
providing a simulation tool whereby scenarios can be developed and costed. In most developed
applications, extensive system re-design becomes a possibility through value-chain modeling.

Although India’s average farm size is smaller, the industry maintains that smaller farmer is a valuable
part of the grower base, and will continue to be so into the immediate future. This characteristic
underlies the importance of initiatives such as sharing of farm equipment and harvesting by grower
owned co-operatives or partnerships, as well as the need to support farmers having a diversity of
income sources.

We need to utilize systems and Practices being followed by Australian Sugar Industry for Supply
chain management of Sugar Cane/Sugar:
The FREDD system is linked to a global positioning system (GPS) on vehicles and cane loaders to provide
real-time system information to a control centre to automatically feed this information forward to the
sugar mill to adjust production rates based on real-time supply chain performance.

Harvesting, coordinated by grower owned harvesting co-operatives/partnerships.

Cane production - In the region.

Costs of Production – Including harvesting; in-field haulage; road transport.

Loss of throughput can add to costs at every link in the supply chain.

Value chain research provides a capacity to increase efficiencies, business integration, and
responsiveness and ultimately market competitiveness. In sugar, such research has expanded rapidly
over the past two decades, and has been motivated world sugar prices and rising costs of production.

Road transport initiatives: The development of larger cane bins and an automatic tarping system for
the efficient transport of whole-crop material.

Harvesting initiatives: The implementation of GPS guidance systems to assist tracking while harvesting,
the use of telemetry to log harvesting Operation and progress, and the further rationalisation of
harvesting groups to reduce costs to growers.

Cane pad initiatives: The optimization of cane pad location to reduce average haul distance for in-field
transporters, again reducing grower’s costs.

Farming initiatives: The development of a controlled traffic farming system that incorporates legume
break crops, reduced tillage and GPS guidance, and upgrading of the website to facilitate collection
and analysis of data from farmers to assist with agronomic and farm financial management decisions.

Environment initiatives: Supporting the change toward whole-of-crop harvesting and minimum tillage
farming, improved on-farm management of acid sulfate soils, drain monitoring, and operating within
the guidelines of an industry established code of practice for sustainable cane farming.

‘Green whole-cane Harvesting’ has necessitated many changes to the harvesting process, including new
harvesters to harvest both the cane and the leaves, large bins to transport the increased biomass to
the mill and automated tarpaulin systems to prevent leaf matter from blowing from the truck during
transport.

As a result of monitoring best-management practices, the industry believes that growers have observed
how they have reduced chemical residues, nutrients and contaminants in the water.

Transport from the cane pads to the mill is controlled by the mill itself. Each vehicle is fitted with a
global positioning system (GPS) and they can be tracked by the mill to assist in scheduling cane input to
the mill.

Waypoints along the truck routes recalculate the truck’s estimated time of arrival at the mill as it
travels. In the future, the GPS will be used to navigate the harvesters through large green crops and
could enable extended hours of harvesting to smooth the flow of cane from farms to the mill even
further.

Each cane-collection bin has an identification number and a radio frequency identification tag
containing a silicon chip that enables it to respond to radio-frequency enquiries. The chip is attached
to the bin and can be accessed remotely; enabling the mill control centre to track all the bins
Air emissions will be reduced by the replacement of the old boilers at the mills with new boilers and
more-efficient emission-control systems. This will enable stack particulate emissions at mill to be
reduced from 400 mg/m3 to less than 100 mg/m3.
CSIRO created a new mathematical computer program capable of analysing the many complex links and
relationships in each region’s sugar supply-chain. When applied to local conditions, the model
identified practical ways to optimise transport infrastructure to reduce costs, while meeting the needs
of all parties.

The Silos are equipped with one or more facilities for Sugar conditioning. Those includes temperature
control of walls, control of the condition of the air space above Sugar ability to blow conditioned air
through the bulk Sugar etc.

A number of problems arise when storing Sugar for long periods. Due to distribution of heat and
moisture the Sugar can ‘cake’ or harden and moist Sugar is difficult to empty from the Silos. The
chemical and microbial stability of the Sugar is influenced by the temperature and moisture
distribution. On the other hand under very dry conditions there is a risk of dust explosions.
The object is to control the temperature and moisture content within a lower and an upper limit.
Mathematical modeling as a tool for understanding and predicting temperature and moisture
distribution in Sugar stored in Silos.

The Pod Trailer is mounted with a stainless steel chamber that rapidly and safely transfers product
using a vacuum pressure cycle, thus eliminating employee exposure to current industry hazards.
Bulk powdered or granular products are efficiently conveyed directly to a silo, either from a domestic
or import container. The system eliminates the need for forklifts, warehousing, manual handling,
repackaging and tanker cleaning.

COMPASS stands for Combining Profitability and Sustainability in Sugar. COMPASS is a way for
sugarcane growers to assess the economic and environmental sustainability of their farms. COMPASS
uses a straightforward easy to use workbook and facilitated workshops have been designed to help
growers identify more sustainable farming practices. It can help you make your farm business more
efficient and profitable as well as operating with awareness for preserving the environment.

COMPASS helps you quickly determine, on a scale of 1 to 4, how your farm practices compare with
guidelines like the Code of Practice. Growers assess their current farming practices in a wide range of
areas, from fertiliser application to harvesting, riparian management to business management, and
everything in between.

Ranking 1 is the top ranking and usually recommends practices or guidelines that go above and beyond
what is required in current recommendations, including the Code. Setting the standards for Ranking 1
gives all growers something to work towards. Growers who are generally adhering to current Best
Practice recommendations but still have some room for improvement should fit into Ranking 2. Ranking
3 growers are those who need to take a closer look at the sustainability of some of their farming
practices to identify where they can improve, and Ranking 4 growers have some way to go before they
can be satisfied they meet industry Best Practice.

Your rankings are your business. COMPASS is a self assessment guide – it is to help you determine how
sustainable your farm is and the rankings give you a better idea of what you can do to improve if you
wish.

The COMPASS Self Assessment Workbook helps growers ensure they are meeting their obligations under
the Environmental Protection Act 1994 and adhering to the recommendations of the industry’s Code of
Practice for Sustainable Cane Growing in Queensland and other Best Practice guidelines.

Major sugar industry partners, including Bureau of Sugar Experiment Stations, CANEGROWERS, Sugar
Research Development Corporation, Environmental Protection Agency, New South Wales Cane Growers
Association, and the Rural Water Use Efficiency Initiative, developed the COMPASS Program. FarmBis
Queensland assists with the delivery of the program to growers by providing a 75% subsidy on the cost
of the workshop.

Government and agribusiness is starting to recognise the value of the program to the industry and
community, and the COMPASS Steering Committee is securing support to continue to improve the
COMPASS Program into the future. This has become an important goal now that the invaluable SRDC
funding provided to develop the initiative has come to an end.

In tropical countries like India with 127 different agro-climatic zones, the impact of global climate
change is evidential through varied seasonal variances such as droughts, coincidentally; these are also
the major agricultural states. Furthermore, the dominance of middlemen increases the extent of food
insecurity. The end result is that the government has to import food grains from other countries.

In India, we still predominantly use traditional techniques such as field based crop cutting experiments
(CCE) to assess the crop yield and acreage. It is worthwhile to note that in India all crop exports and
import decisions are still based on historical production data (previous year's production records), as
against the growing international trend of basing these decisions on more scientific and accurate
methods such as assessing the current year's yield and acreage much in advance of the actual
production by using remote sensing and GIS techniques. The ramifications of taking crucial export and
import decisions based on historical data are that there could be a perceived shortage or surplus.

Agricultural data is currently generated by multiple agencies in multifarious ways; both conventional
field surveys based as well as advance information technology based. Some of the prominent
agriculture data publishing programmes in India are: CAPE (Crop Acreage and Production Estimation),
FASAL (Forecasting Agricultural output using Space, Agrometeorological and Land based observations).
Federal Agricultural department generates the data by field sampling surveys. Industrial houses send
their own field team to assess the acreage and production data. Agencies like Agriwatch, CSE are also
gathering Agricultural Intelligence (AI) data from multiple sources. However, a prudent examination
reveals that all the above data varies drastically.

Aiming to resolve such issues of vagaries in the AI data, RMSI has established a geospatial approach to
rationalise a competent methodology for SCM (Supply Chain Management) which can benefit farmers,
traders, exporters, industrial, government, and federal agencies to combat the exports. The author, in
this paper highlights this through a specific case study conducted by RMSI for estimating crop acreage
estimation, crop yield estimation and production estimation for various exporters.

However, the conventional data does not suffice for many of the users. They need agricultural data
modeled in such as changes in the cropping pattern from the last year, comparative analysis of the last
year data vs. the current year, production pertaining to respective mandis, settlement packages for
farmers without affecting the profit margin of the insurance companies, etc. To create such intelligent
data, RMSI followed two different aspects, namely,

1. Geospatial data validity of comparing Mandi data with remote sensing based outputs.
2. Supply chain management methodology evolved from the above survey

In conventional ways, after the estimation, second level sample surveys are carried out (crop cutting
experiments) or remote sensing-based ground verification is done. However, the data produced, often
does not sync with the final output data produced from mandis or markets or final government figure.
This, in turn, leads to the question of authenticity of data produced from remote sensing.

In recent years, remote sensing has been accepted as an indispensable tool in the field of agriculture.
It helps in crop acreage and yield estimation; health monitoring, agriculture information system, supply
chain management, etc. by trimming the cost and human effort. It is increasingly being used to take
vital decisions for crop marketing and export, crop inventory and commodity trading. The major
activities in SCM that are answered through this RS & GIS approach are:

1. Satellite based crop mapping and acreage estimation at district/tehsil level

2. Crop health monitoring using temporal satellite images and derived vegetation indices
3. Satellite derived indices and weather parameter based yield estimation
4. Comparative analysis on remote sensing based production and actual arrival in the market
5. Spatial database creation of agri-market location and proximity analysis from the produce
6. Vehicle routing from farm to retail outlet using network analyses
7. Decision support system for supply-chain design and management

It is evident from here that AI data produced using geospatial technology is authentic. However, the
data in raw format may not yield results.

Conventional methods of generating data such as undertaking extensive surveys are time consuming
and expensive. At times the government takes important decisions on importing wheat, rubber, sugar,
etc with insufficient and pseudo-geospatial data. Similarly, traders rely on the information provided by
the midd lemen who in turn get this information from the farmers.

This methodology clearly depicts the advantage of Geospatial based supply chain management
techniques. However, the study has a few limitations such as paucity of secondary data and cloud free
satellite data especially during Kharif season. However, if the industrialists and federal government
jointly produce such data, future generations will have easy utility of this supply chain management
model.

A sugar shortage in the international market has pushed prices up and

stimulated production in several countries. Hence, information on areas
where sugarcane is grown and its total production is always in high
demand. All stakeholders in agriculture — including producers,
processors, resource managers, the marketing and finance sectors, and
the government economies — need timely and reliable information on
crop acreage, yield prediction, and production estimation for tactical
and strategic decision making. Early prediction of crop yield is important
for planning and making various policy decisions. This prediction before
harvest is especially crucial in regions characterized by climatic
uncertainties.

Many countries use the conventional techniques of data collection for

crop monitoring and yield estimation, based on ground surveys and
scattered supply-chain reports. There are various statistical, as well as
scientific, methods developed for yield forecasting. Statistical method-
based analysis provides estimates depending on data availability. These
methods are subjective, not to mention very costly and time-consuming.
Empirical models have also been developed using weather data, which
has a number of problems due to spatial distribution of weather stations
and data gaps in the historic data. Because these models are complex in
terms of data requirements and manipulation, information is usually not
available until after harvesting, and therefore will not serve the desired
purpose.
Efforts are under way to improve the accuracy and timeliness of yield
prediction methods. Of the various advanced scientific methods, a
remote sensing and GIS-based approach has been found to be a cost- and
time-effective solution, providing near-real-time information for
estimating acreage coupled with monitoring the health of crops.

The mapping and acreage estimation of crops was carried out using a
hybrid image interpretation technique. The satellite data has a spatial
resolution of 56 meters. The crop yield estimation is based on various
methods and data sources like field surveys, expert knowledge, trend
analysis, regression analysis, statistical models, and crop growth
simulation models.

The study also applied the satellite-based normalized differential

vegetation index (NDVI) to predict crop yield at the district level. The
purpose was to investigate the relationship between satellite-based NDVI
and yield. Data was collected from various sources, such as statistical
reports of the Ministry of Agriculture and the Fertilizer Association of
India. The results showed that there is significant correlation between
remotely sensed NDVI and yield, where average R² obtained in Uttar
Pradesh is 0.76, and in Maharashtra it is 0.92.

The acreage results obtained in sugarcane crop acreage for the year
2007-2008 for Uttar Pradesh and Maharashtra is about thirty million and
one million hectares, respectively. The average estimated per hectare
yield for Uttar Pradesh is 60 metric tons per hectare, and Maharashtra is
71. It can be concluded from the study that the timing of images to be
used for yield estimation is important. However, the predicted yield at
any stage of plant growth accounts for all the factors that affect the
crop, from planting date to the time of prediction. This is then projected
to final yield. As such, predicted yield reflects the potential yield of the
crop with the prevailing conditions. Factors such as drought, floods,
pests, and diseases that occur after the prediction may significantly
reduce the yields.

The study area covered portions of Uttar Pradesh (which is located

between 25° 13'N to 30° 22'N latitude and 77° 05'E to 84° 35' E
longitude, covering an area of about 172,000 sq km) and Maharashtra
(which is located between 15° 40'N to 21° 54'N latitude and 73° 11'E to
80° 00' E longitude, covering an area of about 286,000 sq km). These
districts are the major sugarcane growing areas, representing the entire
state in production.
Figure 1. The study area.

Input Data Sources

Primary. Topographical maps at 1: 50,000 scale, IRS P6 AWiFS images with spatial resolution of 56
meters from the Indian Remote Sensing Satellite, administrative boundary maps for unit-wise statistical
analysis, field survey-based data, information collected from sugarcane growers and GPS points
collected for ground truthing and signature collection of the crop.
 Figure 2. IRS P6 AWiFS false-color composite.

Secondary. The information collected

from district agriculture and state
agriculture boards/offices for
reference.
Methodology
For sugarcane acreage estimation,
cloud-free IRS P6 AWiFS satellite data
from mid-September to mid-October
2007 were used.

Most of Indian Sugar Industry has moved from Open Pit System of Molasses Storage during Cannalised
Trade regime to Storage in MS Tanks as Trade was liberalized. Now with Ethanol Scaling up Mills need
to build SS/Aluminum Floating roof tanks with more adequate Fire safety measures. Industry should
also build Infrastructure to Store Ethanol for Domestic and Export Markets in Consortium if they have to
realise opportune pricing. Tank Terminals for Domestic and exports with adequate Pipelining is
required.

Internal floaters are used quite often for Ethanol service, both food and fuel grade. A good IFR with
good double seals should do the trick. Floating roof metal, gaskets and seals should be compatible
with your particular ethanol (they can vary in corrosivity with feed stock). If Nitrogen blanketing is
used, you have to close up the shell and roof vents and put in PV vents to protect the tank. The IFR
vents will work just fine since they are not active unless the IFR is on its legs (or cables) and there is
product movement beneath the IFR. The IFR will otherwise be just fine with the internal pressure.

The type of IFR used in the ethanol industry is constructed of aluminum and floats on pontoons. The
IFR is also equipped with legs so that when the tank is emptied of product the IFR rests on legs rather
than going all the way to the tank bottom.

Most IFRs have adjustable legs. With an adjustable leg, the roof can be set to land in the maintenance
position, typically 6.5 feet from the tank floor. In the operating position the legs are typically set at
3.5 feet from the floor so that the IFR travels as low as possible without blocking a tank shell manway.
In the low position, the owner utilizes the maximum amount of tank volume without landing the IFR.

The pontoons in an IFR are designed for 100 percent excess buoyancy. This means that in normal
conditions, the pontoons are half submerged. They are simply light wall aluminum tubes with end caps
and structural ears on the end caps that allow the pontoons to be bolted together. The attachment of
pontoons is such that the pontoons are allowed to flex at each connection. A flexible IFR design
enhances the performance and life of the IFR. If the product in the tank has standing waves, the IFR
will move with those waves. If the tank bottom is not even, such as due to long term settlement, the
IFR can adjust to that shape when the legs are landed. The pontoons are pressure tested in the shop
after they are fabricated. When shipped, they still have approximately 10 psi residual pressure.
Because of pre-testing, the cover is typically not float-tested after installation. There is no question
about the ability to float.
The pontoons support an aluminum grid made up of long clamp beam aluminum extrusions and deck
skin. The clamp beams are positioned at the edge of two sheets so that the edge of two sheets are
overlapped, clamped and bolted together. The clamp beam extrusion is one of the keys to the strength
of the IFR. The clamp beam and bolting must be sufficiently secure so that the sheets cannot separate.
When in service, the IFR deck skin is in membrane tension, similar to a drumhead. The clamp beams
allow the sheets of aluminum skin to act structurally as though the IFR was assembled with only one
wide sheet. A load on the deck is therefore transferred out to the edge of the IFR where the load is
restrained by a rim plate. The IFR is installed after the tank is constructed. The installation crew
enters the tank through the tank shell manway, sets up temporary lighting and builds the IFR in place
inside the tank.

Earlier have mentioned of Ware housing development at consuming destinations which also enables
Industry realise better pricing and eliminating too many middlemen. This is overdue and also
investments in Independent Rail infrastructure like wagons which could be shared and optimally
utilized. ISMA and AIDA should focus on these.

There should be uniform Code on Sugar and Ethanol Manufacturing specs so that it becomes easier to
move in bulk. We should eliminate or minimize packaging in 50 Kg bag and move towards Silos for ease
of operations and minimising man power and eliminate Dust Explosions & Fire which happened in the
Industry recently.