Informist, Friday, Jul 12, 2024
By Afra Abubacker
NEW DELHI – Sugar mills must shift from producing conventional sugar to value-added sugar to sustain themselves in the face of weather-related vagaries, declining direct consumption, and inconsistent government policies, Narendra Mohan, former director, National Sugar Institute, said. Mills can't count on just meeting ethanol requirements, as policymakers will prioritise food over fuel, he added.
Value-added sugar is a modified form of the sweetener, and comes in variants like pharma-grade sugars, icing sugar, candy sugar, and fortified sugar.
"We have to hit the bull's eye, suiting different sectors' sugar requirements and earn a premium," Mohan told Informist in a telephonic interview. "Sustainable growth will only come from branding and selling sugar as a product and not a commodity."
The future of sugar mills is about catering to industrial demands, Mohan said. Pharmacies need pharmaceutical sugar, beverages prefer liquid sugar, bakeries need icing sugar, and the hotel-restaurant-catering business wants brown, cube, or candy sugar, he added.
Amid rising calls from health agencies to cut sugar intake, direct consumption has declined. However, indirect consumption has surged due to consumers' preference for convenience amid urbanisation, he said. "Direct consumption has flattened. There is no major rise in per capita consumption," Mohan said.
Though Indian households or retail markets account for 41% of the total sugar consumption, it holds little room for further growth. The annual growth rate is only 1.1-2.4%. The marginal rise we see is only because of population growth, he added.
According to the Indian Sugar and Bio-energy Manufacturers Association, India's annual sugar consumption demand is 28.5-29.0 mln tn. The per capita sugar consumption is pegged at 18.5-19.0 kg per person. "But in this, we are not taking into account the consumption of other sweeteners like jaggery," Mohan said.
On combating the health apprehensions over sugar intake, Mohan said, "Industry will have to innovate...why not make sugar a carrier of nutrients and make it healthier." Like fortified rice, sugar can also be fortified with micro nutrients and vitamins, he added. Fortification is the addition of micronutrients, including vitamins and minerals, during processing into commonly consumed foods or condiments to reduce micronutrient deficiencies.
The share of sugar purchased by industrial and small businesses is only 29% and 30%, respectively. However, industrial and small businesses have the potential to see higher demand growth. Dairy products, like ice cream, yogurt, and flavoured milk, have the highest share of industrial demand, followed by demand from confectionaries, beverage makers, and bakeries, among others.
In terms of annual growth rate of sugar use, beverages promise the most at 35%, followed by juices and milk products at 20-24%. The bakery segment also holds room for more sugar use with 13-15% growth, and restaurants at 16-20%, Mohan said.
Households in rural India account for 65% of sugar demand while the rest is concentrated in urban India. But demand growth is more or less saturated with rural consumption growth at just 1.1% and urban 2.4%. "The data is prior-COVID. It is the latest data available," Mohan said.
On ethanol, Mohan warned the industry against heavy reliance on the biofuel blending programme. "When it comes to food versus fuel, food will prevail. We saw it in (the) Dec 7 order," he said. On Dec 7, the government directed mills and distilleries not to use sugarcane juice and B-heavy molasses for ethanol production to ensure sufficient availability of sugar at affordable prices in an election year. It also restricted sugar exports and sugar diversion for ethanol output in the 2023-24 supply year.
Ethanol is made from starch-containing feedstocks like molasses and grains. Sugarcane juice, B-heavy molasses, and C-heavy molasses are sugarcane by-products obtained during sugar extraction. Sugarcane juice has the most sugar content, followed by B-heavy and C-heavy molasses.
To reduce dependence on crude oil, the government has set a target of achieving 15% blending of ethanol with petrol in 2023-24 (Apr-Mar), and 20% in 2025-26. Oil marketing companies bought 3.27 bln ltr of ethanol and achieved a cumulative blending of 12.5% in the ethanol supply year 2023-24 (Nov-Oct) as of May 31.
Industry experts expect India to miss the 15% blending target this year, as the government restricted sugar diversion for ethanol production amid concerns over sugar availability. The country is expected to achieve only 13.7% ethanol blending with petrol by October, according to Nagaraj Meda, chairman and managing director of commodity research firm TransGraph Consulting.
Mohan suggests the sugar industry must brace itself against abrupt policy changes by diversifying and catering to sector requirements. "Instead of going to DFPD (Department of Food and Public Distribution) asking for policy support, attain sustainability by diversification," he suggested. End
Edited by Tanima Banerjee
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