Is India’s sugar surplus leading to a crisis?

Source– The post is based on the article “Is India’s sugar surplus leading to a crisis?” published in “The Hindu” on 7th August 2023.

Syllabus: GS1- Economic geography.

Relevance: Issues related to sugar production

News-India became the world’s top sugar producer in 2021-2022, surpassing Brazil with a record of 359 lakh tonnes. However, the extensive use of resources in sugar production is depleting rapidly, leading to a potential crisis in the future.

What are the reasons behind excess sugar production?

The excess production is a result of policies and measures that encourage farmers to prioritize the cultivation of sugarcane.

To ensure the welfare of sugarcane farmers, the Central government has implemented the fair and remunerative price scheme. This scheme establishes a minimum price that sugar mills must pay to the farmers.

Moreover, state governments offer significant subsidies to incentivize the cultivation of sugarcane. These actions are motivated by political considerations to win votes in crucial rural areas.

The surplus sugar production has resulted in a notable increase in exports. A record 110 lakh tonnes was exported during the 2021-2022 period.

However, India’s aggressive export promotion and domestic support strategies for farmers have raised concerns among other sugar-producing nations like Brazil, Australia.

They filed a complaint with the World Trade Organization and accused India of violating international trade rules by offering excessive export subsidies and domestic support. The WTO ruled against India, and India’s subsequent appeal was also unsuccessful.

What efforts have been made by the government to address this issue?

The Indian government is diverting it to the production of ethanol. In the transport sector, the use of ethanol-blended petrol significantly reduces harmful emissions from vehicles.

The government launched the EBP programme in 2003 to reduce crude oil imports and curtail greenhouse gas emissions from petrol-based vehicles.

It started with the modest goal of achieving a blending rate of 5%, but the target set for 2025 is 20%.

The government also reduced the Goods and Services Tax on ethanol from 18% to 5% in 2021. In the same year, of the 394 lakh tonnes of total sugar produced, about 350 lakh tonnes were diverted to produce ethanol.

How does excessive sugarcane cultivation impact groundwater?

Sugarcane requires a substantial amount of rainfall, around 3,000 mm. But, in the top-growing States, the actual rainfall received is only 1,000-1,200 mm.

The cultivation of sugarcane necessitates a significant amount of irrigation, with approximately two lakh litres of groundwater required for irrigating 100 kg of sugar.

These States are already prone to drought and face stress on their groundwater resources. It is indicated by a 2022 report from the Central Ground Water Board.

What should be done?

There is a need for evaluating incentives that favour sugarcane cultivation over other crops and lead to a persistent surplus.

Introducing fair and comprehensive subsidy schemes for various crops can encourage farmers to diversify their crops. It can achieve a more balanced distribution of cultivation, prevent monocultures, and ensure a fair income.

In the long term, environmentally responsible sugarcane cultivation practices must be adopted, with a focus on groundwater conservation.

Use of drip irrigation must be promoted. It can reduce water consumption by up to 70% compared to conventional flood irrigation methods.

Investments are needed in water-saving and management systems, including rainwater harvesting, wastewater treatment, and canal irrigation networks.

The Central Ground Water Board conducts valuable research and gathers data. But, there are still gaps in understanding groundwater availability and distribution. Therefore, it is crucial to seriously consider investments in groundwater research.