Informist, Thursday, Aug 1, 2024
By Afra Abubacker
MUMBAI – India’s sugar sector is looking forward to a change in its fortunes following better rains this year and the recent utterances of some government officials. The sector is hoping for predictable policies with fewer restrictions. Millers hope to see caps on sugar diversion for ethanol-making removed, higher rates for ethanol made from sugarcane, and resumption of sugar exports.
The government, too, is hopeful about the upcoming sugar season due to the good rainfall and sound sugarcane acreage, Sanjeev Chopra, food secretary, said at a recent sugar industry conclave. “Things are looking up for the sector,” he said.
"Overall, the projections for 2024-25 SS (sugar season, from October to September) are significantly more optimistic than those forecasted a few months ago," the Indian Sugar Mills & Bio-Energy Manufacturers Association said. "We are confident that the upcoming season will be productive and successful."
According to the association's preliminary estimates, India's gross sugar output in 2024-25 is seen at 33.31 mln tn, down 2% from 33.99 mln tn last season. Gross sugar output is estimated before sucrose diversion for ethanol making.
With the 2024-25 opening stock as of Oct 1 estimated at 9.05 mln tn and gross sugar output in 2024-25 at 33.31 mln tn, the association has projected total sugar availability in the upcoming season at 42.35 mln tn. With an annual domestic consumption demand of 29.0 mln tn, the body has pegged closing stocks in September 2025 at 13.35 mln tn.
However, a challenge for the industry is the lack of clarity in government policies. Having faced many policy shocks in the 2023-24 sugar season, the industry has been highlighting the need for a predictable and sustainable long-term policy for the sector. To secure this, the National Federation of Cooperative Sugar Factories has sketched out a 10-year roadmap and is set to release it on Aug 10. "If policies are changing season to season, this industry is going to collapse," Harshvardhan Patil, president of the federation, said at the conclave.
While Chopra acknowledged the need for a sustainable short- to medium-term policy, he argued that "these surprises are inevitable" as the government has to look at the larger economy and safeguard the interests of the country's population.
"In the broader interest of the country... the diversion (for ethanol production) from B-heavy (molasses) and sugarcane juice was cut," Chopra said, defending the government's stance. "Of course, later we did relax a bit. Overall, about 25 lakh (2.5 mln) tn of sucrose has been diverted in the sugar year 2023-24."
Chopra said the industry has expressed doubts about whether the restrictions on sucrose diversion would continue next season as well. "We would in the near future give that comfort to the industry as to what would be the policy of the government in the 2024-25 sugar season," he said.
"We are sure that some decision (on ethanol) will come in August," a senior government official told Informist at the conclave. The industry has demanded that restrictions on sucrose diversion be removed and the rates of ethanol from sugarcane-based feedstock be hiked. The official did not clarify which of the demands would be decided in August.
While the government has sidelined sugarcane-based feedstock in favour of grain-based feedstock for ethanol production in the 2023-24 ethanol supply year (Nov-Oct), Chopra said recent farm department findings suggest sugarcane is a water-efficient crop for ethanol production and does not consume more water per litre of ethanol produced than paddy or maize.
He also said, however, that the feedstock basket needs to be diversified. "This is not to say we need to only focus on sugarcane... we need to ensure that we have a diversified feedstock," implying that a balanced approach is called for, with due role for sugarcane.
The other major policy pain point for millers is the indefinite extension of the export ban on sugar. "Policymakers sitting in Delhi ended up feeling that the crop could be closer to 29 mln tn (in 2023-24)," Atul Chaturvedi, executive chairman, Renuka Sugars, said at the conclave, explaining the decision. "We had to face the ban on production of ethanol from cane juice, exports going out of the window. And worst was the Essential Commodities Act once again raising its ugly head."
However, government officials have said on many occasions that opening up exports is the least of their concerns. With only two years left to meet the target of blending 20% ethanol with petrol, and the country currently at only 13%, the government is likely to prioritise the removal of restrictions on ethanol manufacturing.
To reduce the country's dependence on crude oil imports, the government has set a target of achieving 15% blending of ethanol with petrol in 2023-24 (Nov-Oct), 18% in 2024-25, and 20% in 2025-26. Moreover, India launched the global biofuel alliance to spearhead the widespread use of sustainable biofuels.
Taking green energy ahead, the sugar manufacturers' association presented a roadmap to transition Indian sugar mills into bio-refineries and produce energy streams other than ethanol. It plans to expand Indian mills to produce bioethanol, bio-electricity, and biogas. It also wants them to venture into the production of sustainable aviation fuel, green hydrogen, and E-100 and 2-G ethanol. This could add new dynamism to the sector.
Calling the industry a "driver of the circular economy", India's G20 Sherpa Amitabh Kant said, "I think it is also important that we highlight the sugarcane industry's importance for energy security."
Though policymakers have shown with the slew of restrictions imposed in 2023-24 that food will be prioritised over fuel, the industry can pin its hopes on India's biofuel plans and on years of good rainfall and surplus sugar production. And 2024-25 may have just set the tone. End
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