why sugar industry face a lot of problem
Answers
The Indian sugar industry is confronted with the following problems:
1. In India, nearly half of the total sugarcane production is diverted to Gur and Khandsari industries which causes a shortage of raw material for the industry.
2. Majority of the mills are old and using obsolete machinery. Management and labor problems further aggregate the situation, making the units uneconomic and sick.
3. The sugar factories also face problem in disposing of the by-products like bagasse and molasses.
Answer:
Let us see the situation in Tamil Nadu.
Disclaimer - I am no sugarcane farmer, heck I am not even a farmer (yet). But I do read stuff.
Couple of years ago we were looking for agricultural land and came across a sugarcane farm for sale, 6 acres. Since I have this very “unhealthy” habit of breaking down things to bits I can understand, I of course read up a bit.
Surprise - sugarcane is actually one of the most profitable agricultural crops in Tamil Nadu.
But after talking to the farmers in that area (Thiruvannamalai district) and analyzing the literature, the reality is this:
It requires hell a lot of water, which of course is problematic in Tamil Nadu. One poor rain season, you are essentially screwed.
Although TN has one of the highest yields per hectare in India (90 tons), it is still not enough to manage the risk. Due to poor government support, yield has actually dropped from 110 tons (in 2010) to 90 now.
It is profitable (about 50K-70K per acre). It is very very capital intensive for an average farmer. You have to spend at least 70K or so per acre. That is a lot. Basically very difficult for small holdings.
Even after you spend (likely based on short-term loans), the sugar mills take 4–6 months to pay.
Government has abandoned the sugarcane farmers. Yield is going down drastically. You know that 20 ton yield makes a huge difference in terms of profitability. This is the sad story in TN (of what once used to be very profitable for the farmer)
hope it helps you.