Sugarcane farmers in the country are suffering from non-payment of their dues by sugar factories. They are also suffering from continuous depletion in the ground water level which requires them to pump out water from deeper levels with every passing year and leads to increase in the cost of production. The main reason for both these problems is that farmers are increasing the production of sugarcane because the Government has fixed the price of sugarcane at high levels. Farmers find it more profitable to produce sugarcane rather than other crops.
The price of sugarcane in India is rupees 280 per quintal versus rupees 220 per quintal in the US. The higher price of sugarcane paid to farmers is an incentive for them to increase the production of sugarcane. Sugarcane requires about 20 irrigations per year. Therefore the increase in the cultivation of sugarcane leads to huge exploitation of our groundwater resources and is leading to depletion of the groundwater.
Simultaneously, this high price of sugarcane is leading to increase in the production of sugar in the country. Our consumption of sugar per year is about 26 million tons against this we are producing about 36 million tons every year. In the result we are producing about 10 million tons of sugar beyond our domestic requirements. This is happening because the Government has fixed the price of sugarcane at high level which makes it profitable for farmers to produce this crop and not others.
Export of Sugar| Production|Cost|Subsidy
The first solution proposed for this problem is to export the excess sugar. However, this is not possible because the cost of production of sugar in India is rupees 35 per kilogram against the prevailing price of rupees 22 per kilogram in the global markets. The Government will have to provide huge export subsidy for the sugar factories to be able to export sugar. This would mean that first the Government is incurring a huge cost in providing subsidised electricity and fertilizer to the farmers in order to produce large amount of sugarcane and then the Government will have to provide further export subsidy to dispose of the excess production of sugar. This is like buying a bag of potato from the market, bringing it home and then paying to coolie to throw the potato in the garbage junk.
Brazil|Ethanol|Export|Import|Cars
The second solution proposed is to use the excess production of sugarcane for the production of ethanol instead of sugar. Ethanol is a substitute of petrol. The engines of the cars can be modified to run on ethanol instead of petrol. Brazil is producing the ethanol from sugarcane. Brazil has developed a seamless method of switching between sugar and ethanol. When the price of sugar in the global marketing is high, Brazil uses sugarcane to produce sugar, exports it at a high price and imports petrol. On the other hand, when the price of petrol in global market is high, Brazil uses sugarcane to produce more ethanol, leading to less import of petrol and it produces less sugar and cuts down the exports of sugar. In this manner Brazil is able to shift from production of sugar to ethanol or from ethanol to sugar depending upon the global market conditions.
Government of India wants to follow the same policy as Brazil. It is trying to promote the use of sugarcane for the production of the ethanol. However our circumstances are fundamentally different than Brazil. The population density in Brazil is 33 persons per square kilometre against 416 persons per square kilometre in India. The rainfall in Brazil is 1250 millimetres per year against 500 millimetres in India. The combined effect of these two figures is that Brazil has about 30 times more water per person in comparison to India. Therefore increasing the production of sugarcane for the production of ethanol in Brazil does not harm the water balance. They have sufficient water to produce this additional amount of sugarcane and ethanol.
Our situation is fundamentally different. Our farmers have been extracting water from increasing depths every year. The water lying deep in the earth has been recharged over thousands of years. We are extracting that “fossil” water for the production of sugarcane and, as a result, the ground water table is going down by about 1-3 meters in most sugar producing states like Uttar Pradesh, Maharashtra and Karnataka. In the result an increase in the production of sugarcane in India will lead to speedier depletion of the ground water whereas this will not happen in Brazil. In this situation it will not be possible for India to increase production of sugarcane to produce ethanol.
Groundwater| Desertification| Extraction| Minqin| China
The consequences of the over extraction of ground water are huge. In certain areas of the world such extraction has led to desertification. One such example is that of Minqin County in China. In the satellite picture given below the area of Minqin County is encircled. One can see that area has become yellow as desert, whereas previously it was green. This has happened because of excessive extraction of ground water. (See Detailed Report Here.)
In the picture below we can see a house which has been abandoned. The desertification has led to reduction of cultivation and the farmer families have migrated from the area.
In the third picture below we give the picture of few plants dying because the ground water table has fallen so deep that the plants cannot access water and are dying.
Similarly we give reports showing that excessive extraction of ground water has led to desertification in Northern America, Southern area of Iran, Northern Morocco and Owens valley of Eastern California. The same condition can be seen in India in Tamil Nadu where excessive extraction of the ground water is being undertaken for paddy cultivation.
The policy of Brazil will lead to the desertification of our sugar producing areas as indicated in these examples.
Buffer Stock:
The third solution proposed for disposing the excessive production of sugar is for the Food Corporation of India (FCI) to buy retain it as a buffer stock. As said above, our annual consumption of sugar is 26 million tons whereas the production is 36 million tons. Therefore the Food Corporation will have to buy and maintain an additional 10 million tons of sugar with every passing year. Now obviously the buffer stock cannot increase at infinitum. Therefore this policy also will not work if we are continuously increasing the production of sugarcane and sugar.
Conclusion|Price of Sugarcane|Subsidies
The only solution for India is to reduce the production of sugar. It is necessary that the government should reduce the price of sugarcane so that it will not be profitable for the farmer to increase the cultivation of sugarcane. Then we will not have the problem of excess stock of sugar which has to be exported by giving subsidies. We will also not have to extract large amounts of ground water for irrigation for sugarcane and we will be saved from the problem of groundwater depletion and desertification.
The problem in this policy is that the farmers will get lower price for sugarcane than what they are getting presently. The solution for this is to reorient the subsidies being given to farmers for electricity, fertilizer and exports. This amount should be transferred directly to the farmer’ accounts in the sugar producing states. If this is done then the farmers will be compensated for the loss of income from lower price of sugarcane and this will become a win-win situation for the country. We will not have to spend to export excess sugar and we will also be saved from the problem of the ground water depletion.
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