Sugar Industry in Crisis! Crop Diseases and Rising Costs Spell Trouble

Sugar Industry in Trouble
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Sugar Industry Faces a Major Crisis Amid Adverse Weather and Crop Diseases

The Indian sugar industry is facing an unprecedented challenge due to a significant decline in sugarcane production. This downturn is a result of adverse weather conditions and widespread crop diseases, leading to lower sugar recovery rates across major producing states. Farmers are bearing the brunt of this crisis, while consumers are likely to feel the impact through rising sugar prices.

The sugar recovery rate, which indicates the percentage of sugar extracted from sugarcane, has fallen drastically. A national recovery rate of 8.81%—down from 9.37% in the previous year—signals a sharp decline in production efficiency. With sugarcane prices already on the rise, the financial burden on both farmers and sugar mills is increasing, further complicating the situation.

Declining Sugar Recovery Rates Across Major Producing States

India has 12 key sugarcane-producing states, but recovery rates have plummeted in eight of them. Among these, Uttar Pradesh, Maharashtra, Madhya Pradesh, and Haryana have reported the most severe declines.

  • Uttar Pradesh, India’s leading sugarcane producer, has seen a 0.85% drop in recovery rates.
  • Maharashtra, another major producer, has experienced a 0.15% decline in recovery rates.
  • Madhya Pradesh and Haryana are witnessing an even more drastic fall, with recovery rates down by approximately 1%.

This downward trend is alarming, as sugar mills are struggling to extract sufficient sugar from the available cane. The reduced recovery rate means that even if the same quantity of sugarcane is processed as last year, less sugar will be produced, leading to an inevitable supply crunch.

Escalating Sugarcane Costs and Financial Pressure on Farmers

While sugarcane recovery rates decline, the cost of sugarcane production continues to increase significantly.

  • In Uttar Pradesh, the state government has already increased sugarcane prices by ₹20 per quintal.
  • Transportation costs, labor wages, and operational expenses have surged, adding further financial stress to farmers.

However, with sugarcane yielding less sugar per quintal, sugar mills are reluctant to pay higher prices. Many sugar mill operators are downgrading the quality classification of farmers’ produce, offering lower payments and pushing farmers into financial distress.

Widespread Disease Outbreaks in High-Yield Sugarcane Varieties

A major factor in the declining recovery rate is the widespread infection in high-yielding sugarcane varieties. The CO 0238 sugarcane variety, which was once praised for its high recovery rate (11% and above), is now rapidly falling prey to diseases.

  • The absence of an alternative high-yield variety leaves farmers with limited options.
  • Farmers are forced to grow lower-yielding varieties, further worsening the production crisis.

Minimum Selling Price (MSP) of Sugar Remains Unchanged Despite Rising Costs

One of the biggest concerns for sugar mills is that the Minimum Selling Price (MSP) of sugar has remained unchanged for the past five years, despite substantial increases in production costs.

  • Sugar mill organizations estimate that production costs have risen by nearly ₹150 per quintal.
  • With the current MSP fixed for five years, sugar mills are unable to adjust their prices to accommodate higher expenses.

To compensate for the losses, mill owners are demanding an increase in the MSP of sugar. However, any such increase will directly impact consumers, as higher sugar prices will be passed down to retail markets.

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