As India enters the new sugar season 2024-25, it is important to understand the developments the industry may witness. Let’s hear from industry stalwart Vijendra Singh, Executive Director and Deputy CEO of Shree Renuka Sugars and President of SISMA (Karnataka), about what the new season might look like. In an interview with ChiniMandi, Singh shared insights on expectations for the crushing season, the ethanol scenario, challenges, opportunities, sugar prices, prospects for sugar exports, expected positive developments, and other important issues facing the industry.
Q: What are the expectations for the upcoming crushing season?
Ans: Although cane planting was slow last year and the cultivated area stayed somewhat reduced, a consistent and above-average monsoon should help cane yields return to normal this year. In general, this year’s sugar cane production is anticipated to exceed last year’s by 7-8%.
Q: How do you see ethanol scenario in Season 24-25?
Ans: The Indian government has removed restrictions on ethanol production from Cane Juice and B-Heavy Molasses, enabling the sugar industry to optimize their distillery operations. While this will allow distilleries to commence full production at the start of the season, pricing remains an unresolved issue.
Q: Do you see some challenges here?
Ans: Yes, although the Fair and Remunerative Price for sugar cane has risen by 11.47%, ethanol prices from the sugar cane industry haven’t been increased since the 2022-23 season. This issue needs urgent resolution, especially considering that ethanol prices from corn have been increased multiple times during the same period.
The ethanol industry’s production capacity has already reached 1648 crore liters annually. To meet future demands, especially with projected production nearing 1000 crore liters, it is essential to boost consumption, streamline logistics, and refine procurement processes. I foresee several challenges in this area which we need to streamline.
To enable over 20% ethanol blending and to avoid hauling ethanol to deficit states, ethanol-producing states should use Flex fuel vehicles and set up petrol pumps that dispense 100% ethanol. Additionally, industry should be permitted to supply ethanol directly in rural areas to minimize depot transportation and lower logistical expenses. Blending in diesel (E5) should also begin soon.
Q: What is your perspective on the ethanol potential derived from corn and rice, and how does it compare with Juice and B-Heavy ethanol in terms of competition?
Ans: I firmly believe that grain ethanol and juice ethanol are not in competition; rather, both will play vital roles in advancing India’s ambitious GREEN FUEL REVOLUTION.
Grain ethanol distilleries will face issues with raw material availability, pricing, and energy costs. However, they will function within their own economic frameworks which is very dynamic. On the other hand, the sugar industry has produced more sugar than consumed domestically, ensuring an ample supply of raw material for ethanol production.
Cane farming has established robust ecosystems where farmers and the industry work together to cultivate and process cane, offering farmers lucrative prices and reliable supply systems.
Cane is a resilient crop that can endure both floods and droughts. In Maharashtra and Karnataka, farmers don’t even need to concern themselves with harvesting and transporting the cane to mills, as this is managed by the mills.
The grain crops are quite delicate, and farmers frequently face challenges in selling them at fair prices and within a suitable timeframe. As grain consumption is closely linked to population growth, it brings up the debate of food versus fuel, unlike sugar consumption, which has not seen proportional increases.
To conclude, the advancement of each industry will depend on their economic capabilities. However, to maintain fairness for both sectors, the prices of juice ethanol and grain ethanol should be equalized. Currently, grain ethanol is priced 13-14% higher. It is important to note that when blended with petrol, both products serve the same purpose.
Q: Why international sugar prices increased and are these sustainable?
Ans: Brazil, the leading raw sugar supplier, is facing a severe drought with no substantial rainfall for the past year. As Brazil’s cane crop depends on rain, this has reduced yield and production. The prolonged drought has also led to frequent cane fires, which cause deterioration and make the burnt cane unsuitable for sugar production.
Last year, Brazil’s cane production reached 660 million metric tonnes, with sugar output at 42 million metric tonnes. However, it appears that this year’s cane production will fall below 600 million metric tonnes, and sugar production will be under 39 million metric tonnes. Furthermore, the drought has halted cane planting, leading to a further reduction in cane production for the 25-26 season. New planting will take place during the rainy season from November to March, but this new cane will only be available in the 26-27 season.
As a result, the decreased supply will probably maintain sugar prices at a stable level.
Q: As prices are better, do you think sugar export is a good option?
Ans: Exporting sugar is advantageous when it fetches higher prices than the local market. We expect major policy changes, like a rise in MSP and ethanol prices, which will soon provide clarity on export economics.
As a nation, we need to choose whether to save foreign currency by using ethanol instead of importing crude oil or by exporting sugar to earn forex. It’s important to note that over ₹50,000 crore has been invested in the ethanol industry and banks have significant exposure. Therefore, utilizing this investment by prioritizing ethanol production over sugar exports might be a viable option, and after maximizing industrial capacity, the excess sugar can be exported.
Thus, a thorough discussion is essential to reach an informed decision that best serves the interests of all stakeholders.
Q: How much sugar is possible to be diverted for ethanol ?
Ans: Approximately, the distillery has the capacity to process about 10 million MT of sugar today, provided that pricing and logistics are effectively managed.
Q: We understand that you recently met the Honourable Home Minister on key issues of sugar industry, how was the discussion and what’s do you expect out of that?
Ans: Yes, I met with the Honourable Home Minister along with sugar industry representatives from Karnataka to discuss the challenges posed by drought, low cane availability, and reduced prices for sugar, ethanol, and sugar exports.
The Honourable Home Minister, who has a deep understanding of the challenges facing the sugar industry, conveyed the government’s strong commitment to maintaining the sector’s economic vitality. He assured us that positive support would be provided regarding the critical issues of ethanol pricing and Minimum Support Price (MSP). We expect policy decisions on these matters to be announced very soon.
Regarding sugar export, he is optimistic and mentioned that it will be reconsidered once there is sufficient stock to meet the domestic demand.
He emphasized that the sugar industry should incorporate grain ethanol plants, as they are more economical compared to independent grain-based distilleries, primarily because of lower energy costs.
To summarise, the meeting was fruitful, and we are optimistic that policies will be made to help sustain / provide growth to the sugar industry enhancing its economic health.
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