Friday, April 13, 2007

How Sweet!

Sugarcane is just a variety of grass. I love to dig my teeth into them but whatever else I knew was pretty basic – the slave-trade once thrived on it; to cultivate this crop, thousands of indentured laborers had been shipped from India to the West Indies - including the ancestors of V.S. Naipaul.

But what is story behind the jar of sugar that sits on my kitchen shelf? I knew next to nothing until I read today morning, a paper written by Harish Damodaran & Harvir Singh, titled “Sugar Industry in UP: Rise, Decline & Revival”,

Harish works with the Businessline and specializes on the Agri-Business sector. In his articles he never intimidates you with arcane formulae and statistical analysis. The approach is WYSIWYG - simple and direct , and this article was no different.

It looks at the topic in three parts –Historical Evolution; 1990s and After, and Socio-Economic Impact. Here are some pearls –

· If it were not for a protectionist colonial government, there would have been no Indian Sugar Industry. In 1932, an ad valorem duty of 185% effectively blocked sugar imports from Java. Within five years sugar factories shot up from 29 to 137!

· During the License-Permit Raj (1960-80), the cooperatives in Maharashtra surpassed UP. And then, in August 1998, the industry was full de-licensed. Distance between mills reduced from 40km to 15km; Economies of scale - new factories to have minimum capacity of 2,500 tcd; Dilution of “sugar levy” – govt share reduced from 45% to 10%…they could now sell 90% of production to open market

· Two international developments also helped: skyrocketing oil prices and the forced phase-out of subsidies on sugar exports by the European Union (EU). Big producers like Brazil started diverting sugarcane to Ethanol production.

· In 2005-06, India produced 19.26 million tones of sugar. UP topped the list at 5.7mT, followed by Maharashtra at 5.1mT

· Production: A typical mill recovers about 10 tonnes of sugar from every 100 tonnes of sugarcane that it crushes. 30 tonnes of bagasse and 4.5 tonnes of molasses generated as byproducts. The bagasse can produce power and the molasses, alcohol.

· Sugar one of the few industries that is completely energy self-sufficient and not dependent on coal or other external fuel sources.

· Thanks to more efficient boilers, for every 30 tonnes of bagasse, there is 8-9 tonnes surplus available for mills to sell -- especially to paper and particle-board makers.

· One tonne of cane makes 100kg of sugar. In addition, it also produces 100 units of power and 9.9 litres of alcohol. Thus Sugarcane yields not just sugar, but also alcohol, commercial energy and paper. As well as fodder for cattle and buffaloes.

· Water-guzzler? Not really. Sugarcane, requires 8-10 irrigations, compared to say, 4-6 in the case of wheat. But then, cane is typically grown over 11 months, whereas wheat is only a 4 - month crop.

· C-4 photosynthesis: Sugarcane uses a more efficient solar energy-deploying mechanism for capturing atmospheric carbon-dioxide and water and converting into starch matter or sugar / biomass. This is unlike rice, wheat, groundnut and several other plant species that employ the less efficient ‘C-3’ photosynthetic pathway.

· A modern sugal mill today generates direct jobs for 700-800 people; irrigated cane crop gives a net yearly return of Rs 18,000 to Rs 24,000 per acre.

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