The Indian sugar millers have been reeling from various crises like unsold sugar stocks, cane dues, unpaid interests etc. Coronavirus pandemic has also aggravated the crisis exponentially by hitting the sugar industry in terms of trends in feasibility of performance, production capacity, consumer market or precisely every factor that is incorporated to make this wheel from farmer to consumer run smoothly. A bailout package seems to be the only favorable solution demanded by the sugar millers at present.
In a conversation with ChiniMandi News, Mr.Samir Somaiya – Chairman & Managing Director at Godavari Biorefineries Ltd. expressed his views on the current scenario of the Indian sugar industry and way forward.
Speaking on the steps the Government should take in order to bailout the industry from crisis. He said, “The Government is already taking steps in the right direction to help the industry and also see the industry as a growth engine. India has proven itself to be a surplus producer of sugarcane. This sugarcane surplus has to be seen as a resource to meet our food and energy needs. The Government realizes this and has announced a bold policy to encourage the use of sugarcane juice/syrup and B Heavy molasses to ethanol. This will be used for ethanol blending with petrol to meet the energy security of the country. The Government is also encouraging the making of 2G ethanol (from cellulose) and Bio-CNG. These are far reaching changes and will transform the face of the industry and indeed the rural economy. But this process takes time. Sugar companies will need to get regulatory approvals and finance to build these distillation assets. Until then, the surplus sugar will have to be exported.”
“The Government has also announced good policies for the export of this sugar. In the current season, India has exported almost 6 million tons of sugar, the highest ever. We are hoping that the Government of India announces a similar policy for the coming season, so that the Indian sugar once again finds its way in the global market.
The Government should also make sure that the price of sugar and ethanol are remunerative in proportion to the price of cane. Currently, the Indian sugarcane prices as a function of sugar price are among the highest in the world. We understand that the farmer needs a remunerative price, but in that case, the sugar or ethanol price must be raised accordingly. With these policy changes, the Indian sugarcane industry will again be a sunshine industry.” He added.
Commenting on demand, supply dynamics play in the upcoming season considering the after effects of the outbreak of Covid-19 Mr. Somaiya said, “There is definitely a slowdown in the sale of sugar. With much of the economy slowly emerging from the lockdown, we hope that the demand picks up as well. The Government is likely to fix a minimum selling price of sugar of Rs. 33 per kg. We expect the price of sugar to be above this level.”
Sharing his views on what measures Indian sugar industry should take to step up for the ethanol production programme and also how his organization is taking steps to be exemplary for the Indian sugar industry in building a sustainable bio-fuel economy he shared, “The millers must quickly apply for regulatory and financial approvals and take steps to divert their sugar surplus to ethanol.
Godavari Biorefineries Limited is very keen on supporting the Government of India’s bio-fuel economy programme. We expanded our distillery from 200,000 lpd to 320,000 lpd in the last season. For the coming season, we are expanding our distillery capacity to 400,000 lpd. Like many sugar companies in Brazil, we have created optionality in choosing between sugar and ethanol. In the coming year, we will be making ethanol via sugarcane syrup and B Heavy molasses. We expect to divert over 40% of our sugars to make ethanol. As a company, we are also keen on working on 2G ethanol, and Bio-CNG policies that the Government is actively promoting. We have also pioneered the use of renewable feedstocks to make a variety of chemicals, materials and renewable power finding applications in pharmaceuticals, agriculture, flavours and fragrances coatings, and more. We are also working with farmers to help them intercrop and improve their agronomy so that they farm and earn better.”
Being asked, knowing that India can be the largest ethanol producer in the world, what long term policies should the Government take for the industry to develop looking at the current scenario and what immediate measures may be required in making the dynamics of demand supply play well Mr. Somaiya said, “Brazil and the USA are very large players in ethanol in the world, and to get to those levels, India will need a wide variety of renewable biomass. But, the Government is already trying to increase the blending percentage and has made bold targets to move towards a 20% blend rate. I think promoting flex fuel cars like in Brazil would be a next step to further encourage higher adoption. And in states that are already ethanol surplus, the blend rate can be increased quicker.”