Sugar Industry

In India, Sugar industry is the second-largest agro based industry after textile, employing 0.5 million people in the sugar mills and 50 million farmers engaged in sugarcane cultivation. India is the largest consumer and the second largest producer of sugar across the globe. The global production of sugar is expected to be 173 million tons (MT) in 2011-12 marketing year (October-September) according to United Nation's body FAO. The same figure stood at 165 MT in the 2010-11 marketing year.

Major Contributors in Production and Consumption, World

Source: Sucden world statistics

Sugar industry is largely driven by domestic consumption in India. Total sugar consumption in India is expected to be around 23.5 MT this year in comparison to the global figure of 163 MT. With growing population and increasing demand in other industries such as chocolates and confectionaries sugar consumption will still increase at a much faster rate owing to other economic factors such as rise in income levels and availability of the FMCG products.

As seen from the figure below the consumption is expected to be growing faster in coming marketing year worldwide with increase in domestic consumption to be around 4% in India.

Global Consumption of Sugar rising faster than production

Source: USDA, foreign agriculture service, 2012

Production of Sugar

Sugarcane and Sugar beet are the two most important sources from which sugar is extracted. These two crops grow under contrasting geographical conditions. Sugarcane is a semi-tropical crop and accounts for majority of the sugar production in the world whereas sugar-beet grows in temperate climate.

The Indian sugar industry can be divided into two sectors including organized and unorganized sector. Sugar factories belong to the organized sector and those who produce traditional sweeteners fall into unorganized sector. Jaggery[gur] and khandsari are the traditional forms of sweeteners.

Sugarcane is the raw material for the production of white sugar, gur and khandsari. Utilization of sugarcane for white sugar production has increased and that for gur and khandsari decreased in the past decade. This could be attributed on account of changed demand and consumption pattern. Sugar production in India has been cyclic in nature. Every 2-3 years of high sugar production are followed by 2-3 years of low sugar production.

2. Value Chain Analysis

There are various by products in the sugar manufacture from sugarcane and sugar beet. By products thus generated in the process of manufacture are used for various activities such as power generation, animal feed, fertilizer,