Maha sugar coops find Brazil model useful

The sugar industry in Maharashtra, producer of nearly a third of all-India output, is enamoured of the Brazil model, given the various constraints on its revenue and growth.

Brazil’s uses sugarcane juice for making both sugar and ethanol (they have one of the oldest programmes for using ethanol in motor fuel), deciding how much is to be used for each, depending on the price. This has, the industry says enabled Brazil to be the leader in not only sugar and ethanol production but also the largest of exporters in these products.

Sugar industry sources told Business Standard: "The issue came up for discussion during a meeting between Union agriculture minister Sharad Pawar and a group of millers on Monday. Although the Brazil model is good for sugarcane growers, processors and consumers, (our) sugarcane control order does not permit use of sugarcane juice for ethanol production. However, millers were unanimous on making a case with the Government of India for an amendment."  

The sources said the millers would soon make a representation on this issue. Industry sources said the model was needed, since 75 million tonnes of sugarcane (of the 80 mt out in a year) is available for sugar production. At an average sugar recovery of 11.5 per cent, the state produces about 8.6 mt annually. However, annual consumption is just three mt and thus the state is forced to scout for liquidating its excess 5.6 mt to other markets. “As a result of additional expenses of freight, there is always pressure on ex-mill realisation, which invariably falls below the average cost of production,” the sources said.

The mills are also interested in generating revenue through bagasse-based power generation through the Clean Development Mechanism and Renewable Energy Certificate methods that are a sequel to the Kyoto accord on curbing greenhouse gases.

Prakash Naiknavare, managing director of the Federation of Cooperative Sugar Factories in Maharashtra, said there was an urgent need for sugar mills, especially from the cooperative sector, to become more professional. "The Federation will certainly take initiative to explore various options for the sustainable growth of the industry," he added.