India: For sustaining the sugar sector, the Centre should push ethanol production


In order to help sugar mills deal with the 145 lakh tonnes of sugar inventory — 95 lakh tonnes more than the normal requirement of 50 lakh tonnes — the Centre has announced export subsidies as well as compensation for the carrying cost of sugar mills. The move is aimed at placating the sugar cooperative sector in Maharashtra which will go to polls soon. That said, there is a real issue of excess. With the new crop arrivals expected to pick up next month, the problem of excess will only worsen. This is despite the fact that the cane crop for the 2019-20 season is expected to be 47 lakh tonnes less than last year’s production of 329 lakh tonnes. With domestic consumption estimated at 260 lakh tonnes, the surplus is here to stay, threatening to depress prices. In order to hold up cane prices and clear farmers’ dues, buffer stocks have become an inexorable necessity. Meanwhile, a global glut in sugar makes it difficult to export viably. Hence, the Centre has, in the time-honoured tradition of placating this politically powerful sugar sector, resorted to a short-term fix. 


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