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Agriculture & Food Management 241

Sugar Sector

7.14 Significance of sugarcane and sugar industry for India’s economy can be gauged from
the fact that it is the country’s second largest agro-based industry, next to cotton. It impacts
the livelihood of over 5 crore farmers and their dependents. India is the largest consumer and
the second-largest producer of sugar in the world. Average annual production of sugarcane is
around 35.5 crore tonnes which is used to produce around 3 crore tonnes of sugar. The domestic
consumption is estimated to be around 2.6 crore tonnes in 2020-21. Over the years, India has
become a sugar surplus nation as reflected from the trend of sugar production and consumption
in Figure 10. Since 2010-11, production has outstripped consumption except in 2016-17.

7.15 This has been possible because of various measures undertaken by Government. For
example, the interest of the farmers is protected by Fair and Remunerative Price (FRP) which
2
has doubled in a span of ten years (Figure 11). In addition, some state governments announce
State Advised Price (SAP) at levels higher than FRP. Additionally, sugar mills that buy sugarcane
are mandated to purchase crops from farmers within a specified radius known as the Cane
Reservation Area. In this way, sugarcane farmers are insured and protected against price risk.

Figure 10: Production and Consumption Levels of Sugar (Million Tonnes)

Source: Based on data of CACP Report on Sugarcane.
7.16 Moreover, in order to handle the surplus production and enhance liquidity of mills, the
Government has taken various steps such as incentivising sugar mills to divert excess sugar
cane/sugar to ethanol production, providing financial assistance for transport to sugar mills to
facilitate export of sugar, etc. About 70 LMT of sugar has been exported in sugar season 2020-
21 in comparison to 59.60 LMT of sugar export in sugar season 2019-20. Further, contracts
of about 30 LMT for export of sugar have already been signed in the sugar season 2021-22.
Moreover, in the past four sugar seasons ending 2020-21, revenue of about ₹ 35000 crore has
been generated by sugar mills/distilleries from sale of ethanol to Oil Marketing Companies
which has helped in clearing cane price arrears of farmers..

2. FRP is the minimum price at which sugarcane is to be purchased by sugar mills from farmers.