Six 

Tamil Nadu Sugar Mills Get Licence For Ethanol Production

The Tamil Nadu government has granted licence to six sugar mills to produce ethanol. The mills,
which are expected to commence production between end-December 2002 and February 2003, will
produce 550 lakh litres of ethanol a year. About Rs 50 crore has been invested by these companies
to attain ethanol production capabilities, said Dr Palani G Periasamy, president, The South Indian
Sugar Mills Association (SISMA).

“Through SISMA, we had applied for the licence for the six mills and the state government
immediately provided the same. About five more mills have applied for the licence. The ethanol
production should lead to an incremental addition of Rs 60 crore in topline for the six companies put
together,” Dr Periasamy told reporters at a press conference held here on Friday

Tamil Nadu has taken the lead in implementing the Central government’s policy of mixing ethanol in
petrol at a five per cent level. “We hopethat the percentage of ethanol permitted in petrol would
gradually increases to 15 per cent to 20 per cent. Also, as the percentage increases, sugar mills
would directly produce ethanol from cane juice (instead of sugar), which would help balance the
demand and supply of sugar in a better fashion,

Cogeneration plants to be set up in 17 sugar mills

TIRUPATTUR: The State government, through the Electricity Board, has decided to set up cogeneration
plants in 17 cooperative and public limited sugar mills across the State at an estimated cost of Rs.925 crore
to generate electricity, Agriculture Minister Veerapandi S. Arumugam said here on Saturday.

Participating in a symposium on drip irrigation organised by Tirupattur Cooperative Sugar Mill, he said the
plants planned would generate 188 mega watt of power. The government had floated the tender and the
works would begin soon, he said.

Cogeneration plants were in operation in 18 out of 21 private sugar mills in Tamil Nadu. These mills together
generated 366.60 mw of electricity. Similarly, cogeneration plants have been set up in three cooperative
sugar mills to generate 20 mw of power. A total of 234.59 lakh units of electricity was supplied to the
Electricity Board during the financial year of 2006-2007, Mr. Arumugam said.

In addition to power generation, distilleries were set up in Salem and Amaravathi cooperative sugar mills for
producing sprit.

A total of 221.49 lakh litres of sprit was produced by the two mills in 2006-2007.

The State government, after procuring licence, had installed 14 distilleries in cooperative and private sugar
mills.

The annual production of sprit by these distilleries was 21.06 crore litres, Mr. Arumugam said. The
government had given permission to set up distilleries in eight private sugar mills during 2007-2008.
Stating that Tamil Nadu had a capacity to produce 645 lakh litres of ethanol a year, Mr. Arumugam said that
this year ethanol plants had been set up at the Salem and Amaravathi Cooperative Sugar Mills and EID
Parry Private Sugar Mill.

This would give the State an opportunity to produce 960 lakh litres of ethanol a year. A total of 1,200 lakh
litres of ethanol had to be produced annually to supply 10 per cent ethanol mixed petrol in the State.

Drip irrigation

On the importance of drip irrigation in sugarcane cultivation, Mr. Arumugam said the average rainfall
recorded in the State was 925 mm. As a result, available water sources were not sufficient for agriculture
and allied activities. Many districts across the State reported depletion of groundwater.

It was under these circumstances the government had been motivating the farmers to adopt drip irrigation
technique. Drip irrigation helped in saving 50 per cent of the water needed for agriculture and allied
activities. It also increased yield.

Mr. Arumugam said the government had set a target of 20,000 ha area under sugarcane cultivation to be
covered through drip irrigation in 2007-2008. It had decided to give 50 per cent subsidy per ha for which
Rs. 58.80 crore had been earmarked.

The government also planned to procure machines for sugarcane cultivation and cut down the cost incurred
by the farmers on cane cutting. If the trial is successful, the government would spend Rs.11.90 crore to
purchase 34 machines for sugarcane cultivation.

Two machines would be given to each of the 17 cooperative and public limited sugar mills, he said.

Surjit K. Chowdhry, Secretary, Agriculture Department, Athulya Mishra, Commissioner, Sugar Department
Sugandhi, District Revenue Officer, and N.K.R. Suriya Kumar, Natrampalli Constituency MLA, spoke.

Later, Mr. Arumugam handed over certificates to the farmers who have been cultivating sugarcane through
drip irrigation technique.

Overview of Sugarcane cultivation:

Sugar Industry is an Agro-based industry and Sugarcane is cultivated by about 5

Lakhs farmers in Tamil Nadu. The registered Sugarcane crop is cultivated in an area of

2.5 to 3.0 Lakh Hectares comprising of about 2% of the total cultivable area. An average of

300 agricultural mandays are generated for cultivation of one hectare of Sugarcane. Also

Sugar Industry employs directly and indirectly about 50,000 persons. Further, the industry

engages vehicles for transport of cane from the field to the factory and for despatch of Sugar

and molasses. The auxiliary industries viz. Distillery-cum-Ethanol, Co-generation

and Paper plants depend upon the Sugar mills for raw material. The Sugarcane is often

used for crop rotation wherever paddy, cotton and groundnut is cultivated continuously.

The Sugar Mills are also involved in rural development and reconstruction through

establishment of Schools, Colleges, Technical Institutions and Healthcare Centers. As

Sugarcane is cultivated under contractual obligation, agricultural credit is easily available to

Sugarcane farmers under tie up arrangement with the mills.

3. Remuneration to Cane farmers:

The State Government have not announced the State Advised Price for four years

from 2001-2002 crushing season and only announced the State Advised Price of Rs.1014/-

per tonne for 2005-2006 crushing season. After assuming the office by this Government the

above State Advised Price amount was disbursed to the cane farmers.

Every year, based on the recommendations of the Commission for Agricultural Costs

& Prices, the Government of India is fixing the Statutory Minimum Price linked to 9.0 %

recovery. For the 2007-08 Crushing Season, an amount of Rs.811.80 per MT of Cane was

announced as Statutory Minimum Price linked to 9.0% recovery. For the 2008-09 crushing

season also the same Statutory Minimum Price of Rs.811.80 per M.T. of Cane was

announced by Government of India. Although there is no increase in the Statutory Minimum

Price announced last year, the Government of Tamil Nadu announced higher State

Advised Price of Rs.1050/- per MT with an increase of Rs.238.20 over and above Statutory

Minimum Price with a premium of Rs. 9/- per MT for every 0.1% increase in recovery.

On the basis of request to further increase this price, the Government of Tamil Nadu has

now decided to raise it to Rs.1100/- per tonne for the 2008-09 crushing season. Besides,

the entire Cane transportation charges are borne by the Co-operative and Public Sector

Sugar Mills from 2006-07 sugar season onwards. Thus by bearing Rs.90/- towards transport
charges and providing on an average of Rs.30/- as recovery based incentive, the Sugarcane

farmers in Tamilnadu will get a Cane payment to the tune of Rs.1220/- per tonne for the

Crushing Year 2008-09. The Tirupattur Co-operative Sugar Mills has paid a maximum

amount of Rs.1262/- per tonne based on sugar recovery besides transport charges of

Rs.90/- totaling to Rs.1352/- per tonne.

Direct sugar mills to take up handover the end products to farmers for
marketing
Posted by Dharviga
sri in Agriculture, Departments, Madurai, Other, Public, businesses,government on December
17th, 2009

Tamil Nadu Toddy Movement has asked the government to direct sugar mills to take up the
works of crushing only and handover the end products to farmers for marketing.

Talking to reporters here last night, coordinator of the Movement C. Nallasami said a proposal
had been sent to Chief Minister asking the government fix a fee for crushing sugar and give
end products to farmers.

Sugarmills were making money not only by selling sugar but by selling molasses also, he said.

Sugarcane farmers have asked the Union and State governments to hike
the minimum support price
Posted by Dharviga sri in Erode, Public, meeting on November 17th, 2009

Sugarcane farmers have asked the Union and State governments to hike the minimum support
price to Rs. 2,000 a tonne.

At a State-level meeting of sugarcane farmers, held here on Monday, the farmers said the
current price Rs. 1,437 was not remunerative and that it would dissuade farmers from
cultivating sugarcane.

The farmers led by State president S.A. Chinnasamy also wanted the Government to direct the
sugar mills to bear the harvest and transport expenses, which at present were borne by the
farmers.
They also sought the repeal of an Act that directs sugar mills not to pay more than the
Government-fixed price for sugarcane.

The farmers warned that if the Government did not heed their suggestions on price, the area
under sugarcane cultivation would comedown, and the Country would be forced import sugar.

And the cost at which the nation would import sugar would be more than what the farmers
would demand, they argued and wanted the Government to encourage sugarcane farmers by
hiking the minimum support price.

The farmers other demands included protection of Cooperative sugar mills and the repayment
of the money the Government collected from farmers for setting up co-generation plants in
Cooperative mills.

Problems In sugar industry

Some of the main problems faced by Sugar
Industries in India
Sugar prices have doubled over the last 15
months. In 2008-09, particularly, a larger part of
the sugar cane was used for making gur than in
earlier years. This exacerbated the sugar
shortage, even though cane production that
year saw only a 20 per cent drop from the
previous season, sugar production tanked 43 per cent.

India’s current sugar consumption is between 20-22 million tonnes, and this level was
exceeded in 2006-07 and 2007-08. Initially prices in the world market were higher than
Indian prices and the exporters were a happy lot. India is expected to close the current
sugar season with production at 16-16.5 million tonnes, whereas demand is at 22 million
tonnes, leaving a gap of around 7 million tonnes.A recent FAO report predicts a sharp fall in
sugar production in India in the year 2009. The country has contracted to import 3.8 million
tonne of sugar so far this season, of which, 1.8 million tonne have arrived.

India is the fourth lowest cost sugar producers in the world after Australia, Brazil and
Thailand. India’s cost of sugar production is one-fourth of that in Europe. India’s sugar
sector faces a fall in prices, rising raw material costs, limited export capacity and a lack of
flexibility to produce ethanol for biofuel, analyst Licht said.
Sugar is the second largest agro-based industry in India. The industry provides employment
to about two million skilled and semi-skilled workers besides those who are employed in
ancillary activities, mostly from rural areas. Though the industry contributes a lot to the
socioeconomic development of the nation, it is plagued with a number of problems such as
cyclical fluctuations, high support prices payable to farmers, lack of adequate working
capital, partial decontrol and the uncertain export outlook. Global sugar prices have fallen
sharply because of a huge glut of production driven by the world’s leading producers such
as Brazil, India and Thailand.

Major challenges faced by sugar industry in India:

-  The seasonal nature of the industry,

-  Old and inefficient methods of production,

-  Transport delay in reaching cane to factories

-  The need to maximize the use of Baggasses

The Issues Of Sugarcane Growers – N K Shukla

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A large number of sugarcane

growers, particularly from western
Uttar Pradesh marched to parliament
on 19 November and forced the
central government to reconsider its
decision to do away with SAP (State
Advised Price) of sugarcane. Though
the rally was called by Lok Dal leader
Ajit Singh, a good number of
participants were general cane
growers, who have been agitating for
fair price of their sugarcane and also for the payment of huge arrears pending with various
sugar mills. It is to be recalled that the cane growing farmers are agitating throughout the
country for fair price of, since the month of September, which is the beginning of the
season.
The agitation had gathered momentum after 21 October because government of India on
this date promulgated an Ordinance called Essential Commodities (Amendment and
Validation) Ordinance 2009 which replaces the SMP (Statutory Minimum Price) by Fair and
Remunerative Price of Sugarcane. This ordinance also did away with clause 5A of Sugar
Control Order of 1966, which means that the sugar mill owners are now not obliged to share
their profit with the cane supplier farmers. By the said ordinance the central government
favored the sugar mills by freeing them from paying any SAP. The central government also
announced that any SAP decided by any state government will have to be paid by the state
government themselves. This is despite the fact that the Supreme Court has already upheld
the system of obligatory payment of SAP along with SMP.

After the massive protest by the cane growers on 19 November, the government of India
has assured to retain the provision of SAP (to be paid by mill owners) but the demand of
retaining 5A of the Sugar Control Order 1966 (to share the profit with farmers) is still
pending.

Now coming to the price of Sugarcane for current year, the central government has decided
Rs 129.84 per quintal as FRP for 2009-10.This meager price announced by the government
will not satisfy the demands of the farmers even if some SAP is added by the various state
governments. The whole system of sugarcane pricing has been unpractical; favoring the
sugar mills and is against the interests of cane growers. The central government has
unilaterally announced the sugarcane prices without consulting the farmers’ organizations,
sugar mills and the concerned state governments. According to the recommendations of the
National Commission for Farmers headed by Dr Swami Nathan, the support price of any
crop should be fixed at C2 +50 percent margins (double the production cost plus 50 per
cent of the cost as margin/profit). Based on this formula, the CACP calculated Rs 101.32
per quintal as the average all India cost of production of sugarcane for 2008-2009. If this
cost price is doubled and the risk factor of 10 per cent, the transportation charges and the
margin of 50 per cent is added, the actual fair and remunerative price (FRP) will not be less
than Rs 250. Besides, the sugar mills are earning profit also by using molasses for
breweries and other byproducts for paper mills or for fuels. In some of the states, cane
growers are not allowed to sell their canes to mills other than those in their circle area and
also not to the crushers.

It is to be noted here that the abnormal increase in the market price of sugar in recent
months has nothing to do with the price of sugarcane paid to the cane growers last year,
which was around Rs 125 to 130 per quintal as an average. In the last one year, the sugar
price has almost doubled but that profit is not shared with the cane growers. Moreover huge
arrears are still pending with various mills.

The step motherly treatment meted out to cane growers for years has forced the farmers to
withdraw from sugarcane cultivation in recent years. It has been estimated that the area of
sugarcane growing declined from 5.04 million hectares in 2007-08, to 4.38 hectares in
2008-09 and to 4.26 million hectares in 2009-10. Consequently the sugar production in our
country declined from approximately 30 million tones to 15 million tones in one year. This
means that now the production is less than the average demand for sugar in our country
which is around 23 million tones at present. But the present high increase of sugar price is
not due to the decline in acreage of sugarcane cultivation but due to speculation, hoarding
and black marketing, which the government committed to neo-liberal policies is unable to
control.

The central government has no right to play with the lives of either cane growing farmers or
with the general consumers. In this situation, the cane growing farmers have no other option
but to fight for real remunerative price and the consumers have to fight for fair price of
sugar, while supporting the genuine and just demands of sugarcane growers.

Sugar Industry Statistics

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Sugar is Rs.30,000 crore industry with 50

million employment generated by 571 sugar
factories and related sugar industry. India is the
largest sugar producer in the world. Over 11
million tons of refined sugar is produced,
accounting for 60% of the total sugar cane
cultivated. India’s sugar year (SY) is October-
September. India’s domestic sugar market is
estimated at Rs. 250 billion.

In the 3 years 2006 thru 2008, a total of over 9.5 million tonnes of sugar were exported. The
average price realisation of these exports in the period April 2007 to the end of 2008 was
Rs.11,765/tonne for raw sugar, a price that is less than half the current international price of
around Rs 24,000/tonne.
The government modified sugar cane control regulations in December 2007 to allow direct
production of ethanol from sugar cane juice by sugar companies without any quantitative
restrictions. Plans were also being made to mandate a 10 per cent (up from the current 5
per cent) blending of petrol with ethanol to absorb the expected ethanol production
prompting Reliance and HPCL to acquire sugar mills for fuel production.

According to the Indian Sugar Mills Association (ISMA), sugar production in 2008-09
season is expected to decline by 43 per cent to 14.7 million tones from 26.4 million tones in
the previous year.