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Sugarcane farmers feel they’ve got the short end of the stick

Sugar mills in Maharashtra are witnessing a transition, as more sugarcane is being allocated for ethanol production, which is receiving a push by the Central Government. Of the 200-odd sugar mills in the state, 76 have ethanol distilleries and more are looking to start their on-campus distilleries. Sugarcane farmers, however, claim that the demand for sugarcane, as the country transitions to the crop-based biofuel ethanol, has not had any positive impact on their incomes. MANISH KUMAR reports

Sahoo Thorat, 47, is a sugarcane farmer in Kalawade, a village in the Satara District of Maharashtra, western India. For the past 25 years, he has been cultivating sugarcane on his four-acre farm. This November (2022), he was busy loading bundles of harvested sugarcane on his bullock cart to transport it to the nearest sugar mill at Rethare in Karad, the nearest town, around 12 kilometres away. Karad, situated in western Maharashtra, adjacent to the confluence of Koyna and Krishna rivers, has seven out of Satara District’s nine sugar mills. It is known as the sugar bowl of Maharashtra.

Every November, in Karad and other sugarcane-producing areas in Maharashtra, vehicles loaded with sugarcane are usually seen heading from farms to sugar mills. The mills then crush the sugarcane and process it to produce sugar. They also use the sugarcane juice and other by-products such as molasses (a viscous liquid that remains after crushing) to produce ethanol.

Ethanol production is common in the sugar mills of Maharashtra, but recently it has got an impetus with the Indian Government pushing for ethanol produced from sugarcane as a biofuel to blend with petrol. This aims to reduce oil import dependence and also pave the way for a cleaner fuel regime.

Workers harvest sugarcane from a field from Kalawade, a village in the Satara District.

“A number of sugar mills in Maharashtra had been producing ethanol traditionally and using it to manufacture a local brand of indigenous country-made liquor and also utilise the same for making spirit for medical purposes. However, in the past three years, with the thrust of the Indian government for biofuel, many of these mills have started diverting the ethanol produced in their mills to be used as a biofuel which could be blended with petrol under the National Ethanol Blending Programme (EBP),” Bharat Khandekar, senior scientist at the Krishi Vigyan Kendra (KVK) at Karad, told Mongabay-India. Ethanol, a biomass-based energy source and therefore renewable, has proved to be a good fuel worldwide, when blended with petrol.

Speaking to Mongabay-India, managers at various sugar mills in the region agreed that India’s promotion of ethanol blending has given a boost to the mills. Ajit Chougule, executive director of the West Indian Sugar Mills Association (WISMA) pointed out that sugar mills have liabilities such as assured fair and remunerative price (FRP) for farmers fixed by the government, allocated monthly sugar selling quota ceiling and more. A number of sugar mills also face losses due to non-availability of sugarcane, poor recovery and financial issues. Chougule said that the national thrust on sugarcane-derived ethanol production can help sugar mills recover from financial vulnerabilities and help the sugar industry as a whole.

“One of the main benefits under EBP is an organised national market where the ethanol produced at mills can be sold to the (state-owned) oil marketing companies (OMCs) that enter into long-term contracts with the sugar mills. This is unlike the scattered diversion of ethanol from mills for local procurement. This gives the mills an assured buying option, taking care of the transportation charges and timely payback. This will help the mills and in case of surplus income, this could also be shared with the farmers under the revenue-sharing formula. The increased rate of procurement of ethanol from mills was also recently approved by the Union Cabinet making it more profitable for the mills to produce ethanol,” Chougule highlighted.

Further addressing how ethanol would help sugar mills mitigate financial stress, a Lok Sabha document notes, “As the revenues generated from sale of ethanol by sugar mills/distilleries reach the accounts of sugar mills in around three weeks time as against 3-15 months time taken from sale of sugar, production of ethanol would improve liquidity of sugar mills enabling them to make timely payment of cane dues of sugarcane farmers.”

Sugar mills and sugarcane farmers

Sugarcane farmers say it is good to have an assured FRP, but opine that it needs to be increased to reflect increases in costs for living and for a fairer share of revenue. The benefits that come with the increased ethanol production at the sugar mills have not yet trickled down to the farmers, notes Vishwas Jadhav a 40-year-old farmer from Karad, who is also an active member of the Baliraja Shetkari Sanghatana, a farmers’ body in the state.

A sugar mill at Rethare in Satara. According to the office of Sugar Commissionerate in Pune, there are around 200 sugar mills in Maharashtra.

“Several sugar mills in Maharashtra, including the ones in Karad, are diverting sugarcane and its by-products to produce ethanol and earn more from the (government’s) ethanol blending programme. They are also using bagasse to produce electricity and using other by-products to make more profits at their end. But our incomes have not seen an appreciable surge in the last few years. We are receiving the FRP which is not in line with the rising costs of cultivation and living. There are many states which are giving a better price to their sugarcane farmers,” Jadhav told Mongabay-India.

Many farmers from Karad echoed the sentiment – that there was not any measurable change in their incomes in the last few years. While states like Maharashtra pay their farmers FRP, some states like Uttar Pradesh pay through what is called the state advised price (SAP), which is set by the state government and is often more than the FRP. While the FRP for sugarcane, set by the central government for the sugar season of 2022-23 (October-September), was Rs 305 per quintal, the SAP in UP was Rs 340 per quintal. Other states offering SAP include Punjab, Haryana, Uttarakhand and Tamil Nadu.

Sugarcane farmers in the states that offer SAP are earning 10-15 per cent more per quintal compared to the farmers in Maharashtra. The state’s Sugar Commissioner Shekhar Gaikwad explained that sugarcane farmers could perhaps benefit from the ethanol-blending programme through a revenue sharing formula (RSF). As per this formula, mills earning surplus revenue would share it with the farmers. RSF was recommended in the 2013 report of the Rangarajan Committee set up by the Indian government to look into the regulation of the sugar industry.

Gaikwad, however, admitted that none of the mills in the state have been able to share the surplus revenue with farmers so far, as this can only be done when the selling price of sugarcane goes up to Rs. 370 per quintal. Selling price is the rate at which the sugar mills are selling sugarcane that they have obtained from the farmers. This is usually higher than the FRP, which is the price that farmers sell at. While the FRP amount and its distribution, set by the Central Government, is one of the major challenges that the sugarcane farmers are facing in Maharashtra, they recognise that there are benefits to the established relationship they have with the sugar mills. A number of these mills are run by farmers’ cooperatives.

Anil Bhosle, a sugarcane farmer from Khodsi Village in Satara District, said that it is only via the sugar mills that they can get an assured purchase for their harvested crop and also, the sugar mills often take care of the harvesting and transport charges. This is one of the reasons farmers like him continue with sugarcane farming and do not switch to other crops. “Five labourers harvested sugarcane from my field last month; they were sent by the mill. The mill also managed the transport,” Bhosle said.

According to government data, the production of sugarcane in Maharashtra has increased in the last three years. It produced 10,15,94,920 tonnes of sugarcane in 2020-21 while the state exported 113.30 tonnes of sugar, the highest in the country. According to the Indian Sugar Mills Association (ISMA), 61 percent of India’s sugar export was from Maharashtra in 2021-22.

The area under sugarcane cultivation has also increased in the last seven years. While it was 9.87 lakh hectares in 2015-16, the total area under sugarcane cultivation in Maharashtra in 2021-22 stood at 12.32 lakh hectares, comprising 19.68 percent of the total agricultural land in the state.

Sugar mills transition to meet ethanol demands

India’s federal government started an ethanol blending programme in 2003 but it could not be expanded on a large scale. In 2019, the programme was scaled up across the country with a target to achieve 10 percent ethanol blending by November 2022. This target has been achieved. In 2018, the government also introduced a National Biofuel Policy to approve producing more ethanol from diverse sources such as agricultural wastes, sugarcane juice, sweet sorghum and foods with starch, such as corn, cassava and food grains like wheat and broken rice. Currently, the majority of ethanol used in ethanol blending is derived from sugarcane alone. India now aims to achieve 20 percent ethanol blending by 2025.

According to the office of Sugar Commissionerate in Pune, there are around 200 sugar mills in Maharashtra; 76 of them have in-house distilleries which produce ethanol in addition to the 46 standalone distilleries that are producing ethanol by procuring sugarcane juice and by-products from these sugar mills. However, with the rise of ethanol demand due to the expansion of the EBP, the working style of sugar mills is in transition.

A farmer readies the water for the sugarcane crops in Baramati. Increased ethanol production will also increase the carbon footprint due to the
electricity required for irrigating this crop.

Sugar Commissioner Gaikwad, who is based in Pune, told Mongabay-India, “Now, on an average a sugar mill uses 80 percent of the sugarcane to produce sugar while 20 percent is diverted for making ethanol. In countries such as Brazil, sugar factories use 80 percent of sugarcane for ethanol production. In Maharashtra also, the dynamics are changing slowly.”

Gaikwad added, “Most of the sugar mills which do not have distilleries now have applied to the union government to start their own units to produce in-house ethanol for biofuel. Slowly, the ratio of sugarcane diverted for ethanol production is set to rise and in the coming days the mills can decide how much of the sugarcane they want to use for ethanol production. I expect in the next few years there will be a five-six percent additional diversion of sugarcane every year towards ethanol production. Currently, there has been surplus production of sugar from Maharashtra.”

Maharashtra is currently the second Indian state after Uttar Pradesh to produce the highest quantity of ethanol from sugarcane with a capacity of 247.2 crore (2.47 billion) litres per year. According to sugar commissioner Gaikwad, the state produced 118 crore (1.18 billion) litres of ethanol in 2021-22 and the total production is likely to touch 140 crore (1.4 billion) litres by next year. The state supplies around 30 percent of the country’s ethanol supply.

Challenges and solutions

Sugarcane is grown in 26 out of the 36 districts in Maharashtra. According to a study, sugarcane cultivation in the state is only in six percent of cultivable area but takes a massive 70 percent share of the total irrigation demand of the state. Another study found that the cost of sugarcane cultivation was almost double in Maharashtra than in Uttar Pradesh because of longer growth period of the crop, which leads to consumption of more fertilisers, human labour, machine labour and irrigation water. Experts say the surging demand for ethanol and the increasing acreage under sugarcane cultivation can affect the environment and cultivation of food crops.

K.J. Joy, senior fellow with Society for Promoting Participative Ecosystem Management (SOPPECOM), Pune, told Mongabay-India, “Sugarcane is a water-guzzling crop. If more areas come under sugarcane cultivation, it could need more water, and this can affect the groundwater too. Owing to the intensive water demands of the sugarcane crop, salinity has increased in many areas and made such lands unsuitable for the growth of other crops in future, besides decreasing the production of sugarcane crops too.” He recommended that the government put a cap on the land under sugarcane cultivation in the state, to ensure the growth of other crops, maintain a balanced biodiversity and curtail monoculture besides preventing other adverse impacts on local soil conditions and water availability.

Increased ethanol production will also increase the carbon footprint due to electricity required for irrigating this crop. The electricity that comes from the grid is largely generated by coal-fired power stations. A study conducted by the Indian Institute of Technology (IIT) Bombay claimed that for each kilogram of sugarcane produced the average emission of carbon dioxide (carbon footprint) in the state stands at 0.11 kg while 285 litres of water (water footprint) is used for the production of one kg of sugarcane. The report claimed that if there is an increase in the cultivation of high yielding varieties, more use of renewable energy in micro irrigation and modern cogeneration facilities, there could be a 50 percent reduction of estimated carbon, energy and water footprint which can also help in increasing farmers’ income and making sugarcane farming more sustainable.

Some farmers are moving to solar-powered irrigation pumps, but this trend is yet to pick up pace. Prakash Thorat from Karad, who has installed solar panels on his rooftop claims that he irrigates his fields only with clean energy sources. “I was one of the few farmers in the region who started using solar energy to draw water. I have installed solar panels. This is an off-grid solution and thus unlike others when I irrigate my land there is no use of electricity which comes by burning coal,” he told Mongabay-India.

“I installed the solar pump under the Mukhya Mantri Saur Krushi Pump Yojana and invested only Rs 16,500 for this three-kilowatt solar setup. I undertake sugarcane farming in two acres of land and the whole is irrigated with my solar pump,” added Prakash. He believes that with more awareness about renewable energy and the process of setting up solar panels, more farmers can use it to irrigate their fields.

(Courtesy: Mongabay-India. This story was produced with the support of Internews’ Earth Journalism Network.)

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