Sugar

There are 716 installed sugar factories in the country as on 31.01.2016, with sufficient crushing capacity to produce
around 330 lakh MT of sugar. The capacity is roughly distributed equally between private sector units and cooperative
sector units.

The capacity of sugar mills is, by and large, in the range of 2500 TCD-5000 TCD bracket but increasingly expanding and
going even beyond 10000 TCD. Two standalone refineries have also been established in the country in the coastal belt of
Gujarat and West Bengal which produce refined sugar mainly from imported raw sugar as also from indigenously
produced raw sugar. The sector-wise break-up of sugar mills in the country is as given below:-

Sr. No. Sector Number of factories

Co-operative 326

2 Private 347

3 Public 43

Total 716*

*Includes each refinery in West Bengal & Gujarat.

PRODUCTION, CONSUMPTION AND STOCKS OF SUGAR

Production of Sugar

Sugar production in India has been cyclic in nature. Every 2-3 years of high sugar production are followed by 2-3 years of
low sugar production. From the sugar season 2010-11 onwards, the production of sugar has been surplus over the
domestic requirements in the country. As such, it appears that the cyclicity in sugar production has reduced.
 Problems of Indian Sugar Industry

In India about one-third of the sugar cane production is utilised for making gur and khandsari. This causes
shortage of raw material for the sugar mills.

The sugar industry has a seasonal character and the crushing season normally varies between 4 and 7 months in
a year. Thus, the mill and the workers remain idle for almost half of the year. This creates financial problems.

The average rate of sugar recovery from the sugar cane is less than 10 per cent. This recovery rate is low, when
compared to other sugar producing areas like Java, Hawaii and Australia, upto 14 per cent.

Most of the sugar mills in our country are of small size with a crushing capacity of about 1200 tons per day.
Thus, most of them are not viable.

. Most of the sugar mills in Uttar Pradesh and Bihar are more than 50 years old. These mills are working with old
and outdated machinery. Thus, low production reduces the amount of profit and finally makes the unit sick.

The cost of sugar production in India is one of the highest in the world. This is due to high sugar cane cost,
uneconomic production process, inefficient technology and high taxes exercised by the state and the central
governments.

The main by-products of the sugar industry are bagasse and molasses. The industry faces problems in disposing
these by-products, especially under pollution control devices.

. The government policy, based on dual price system, discourages the entrepreneurs to make investment for
further growth and improvement.

The profit margin should be increased for future developments.

The per capita annual consumption of sugar is about 10 kg in India, whereas it is about 20 kg in the world.

To counter these problems the government has changed some of the policies to give
impetus to the sugar industry:

The new system for distribution of sugar in the PDS

The Central Government has decontrolled the sugar sector partially by removing the levy obligation on sugar mills and
doing away with the regulated release mechanism on open market sale of sugar. Prior to it, sugar mills were mandated
to supply 10% of their production to meet the Public Distribution System (PDS) demand. Sugar mills are now free to sell
their entire production as per their commercial prudence. However, under the new dispensation, to make sugar
available in the PDS at the existing retail issue price of Rs. 13.50 per kg, the State Government/UT administrations are
required to procure it from the open market through a transparent system. The Central Government is reimbursing the
States/UT’s @ Rs. 18.50 per kg, limited to the quantity based on their existing allocations. Recently, the Central
Government has given liberty to the States/UTs to either absorb the additional cost, if any, on account of handling,
transportation and dealer’s commission or pass it on to consumers by including it in the Retail Issue Price.

Further, with a view to ease out the financial burden of the State Governments, the Government is providing advance
subsidy to all State Governments who approach the Central Government for the same.

The new system of open market procurement of sugar has been adopted by 30 States/UTs from June, 2013 onwards.
An amount of Rs. 4500 crores has been released to the States/UTs. during 2015-16.

INCENTIVE SCHEME FOR MARKETING AND PROMOTION OF RAW SUGAR PRODUCTION

The Government on 28.02.2014 has notified a scheme allowing incentive for marketing and promotion services for
raw sugar production targeted for export market for a quantity of 40 lakh MT during 2013-14 and 2014-15 sugar
seasons. The incentive amount was increased to 4000 per MT for export of raw sugar during 2014-15 sugar season
subject to ceiling of 14 lakh MT. The incentive available under the scheme shall be utilized by the sugar mills for making
payment to the farmers. About 7.75 lakh MT of raw sugar has been exported till end of 2013-14 sugar season and about
5.85 lakh MT has been exported till end of 2014-15 under the incentive scheme

Oil Divison :

It seeks to coordinate management of edible oils in the country through a multi-pronged strategy, namely,

(i) Assessment of the domestic demand for edible oils and its availability from domestic sources. Mismatch of
demand and supply is met through import of edible oils so as to maintain their prices at reasonable level;

(ii) It also closely monitors prices of edible oils both in the domestic and in the international market and
initiate necessary policy measures whenever necessary. The Division is staffed with qualified technical
people who assist the Ministry in the coordinated management of Vegetable Oils particularly relating to
production/availability and monitoring of prices.
Types of Oils commonly in use in India

India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut,
mustard/rapeseed, sesame, safflower, linseed, nigerseed/castor are the major traditionally cultivated oilseeds.
Soyabean and sunflower have also assumed importance in recent years. Coconut is most important amongst the
plantation crops. Efforts are being made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu and North- Eastern
parts of the country in addition to Kerala and Andaman & Nicobar Islands. Among the non-conventional oils, rice bran oil
and cottonseed oil are the most important. In addition, oilseeds of tree and forest origin, which grow mostly in tribal
inhabited areas, are also a significant source of oils.

Major Features of Edible Oil Economy.

There are two major features, which have significantly contributed to the development of this sector. One was the
setting up of the Technology Mission on Oilseeds in 1986 which has been converted into a National Mission on Oilseeds
and Oil Palm (NMOOP) in 2014. This gave a thrust to Government's efforts for augmenting the production of oilseeds.
This is evident by the very impressive increase in the production of oilseeds from about 11.3 million tonnes in 1986-87
to 26.68 million tons in 2014-15. Most of the oilseeds are cultivated on marginal land and are dependent on rainfall and
other climatic conditions. The other dominant feature which has had significant impact on the present status of edible
oilseeds/oil industry has been the program of liberalization under which the Government's economic policy allowing
greater freedom to the open market and encourages healthy competition and self regulation rather than protection
and control. Controls and regulations have been relaxed resulting in a highly competitive market dominated by both
domestic and multinational players.

Major recent decisions in respect of edible oils during 2014-15

Export of edible oils in branded consumer packs is

permitted with a Minimum Export Price of USD 900
per MT.

Organic edible oils subject to export contracts

being registered and certified as ‘Organic’ by
Agricultural & Processed Food Products Export
Development Authority (APEDA) and Rice Bran Oil
in bulk have been exempted from the ban on
export of edible oils

The import duty on crude oils increased from 7.5%

to 12.5% and import duty on refined edible oils has
been increased from 15.0% to 20.0%.
Questions:
Explain the food procurement system in India and also suggest measures to improve this sector?
Describe the sugar sector in India and explain the difference in the peninsular and non peninsular sugar sectors?
Oil Palm sector is a promising sector. Analyze
Describe the food storage sector in India and suggest measures to improve this sector?