Production Efficiency and Price Behaviour of Sugar in India
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Date
2016
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DIVISION OF AGRICULTURAL ECONOMICS ICAR-INDIAN AGRICULTURAL RESEARCH INSTITUTE NEW DELHI
Abstract
In an era where there is a need of sustained and inclusive growth, the sugar
industry has successfully contributed to the employment and economic development
of rural economy. India is the second largest producer and largest consumer of sugar
in the world. Sugarcane is one of the most important commercial crops grown over 5
million ha having production and productivity of 352 million tonnes and 70
tonnes/ha respectively in 2013-14. The area, production and productivity of
sugarcane has certainly increased over the time but growth rate of area has been
significantly higher than that of yield and thereby contributing more to the increased
production of sugarcane. Between two major sugarcane producing states Uttar
Pradesh and Maharashtra, productivity is higher in Maharashtra due to longer
duration crop and favorable climatic conditions. The real cost of cultivation of
sugarcane has shown increasing trend over the years. The study found that sugarcane
productivity was positively and significantly contributed by human labour, machine,
fertilizers, insecticides and size of plot. Although sugarcane productivity was found
higher in Maharashtra but profitability was estimated higher in Uttar Pradesh.
In India the number of installed sugar factories, total employees and total
workers per factory has shown a decreasing trend over the years. But gross value
added and fixed capital formation per factory has shown an increasing trend over the
study period. The study estimated that Indian sugar industry was operating at 60.5%
overall technical efficiency level in the year 2012-13 means that 39.5% of input use
could be reduced without affecting sugar output. Firms were not found profitable in
that particular year however they were solvent in long term as well as in current
period.
Higher Fair and Remunerative Prices and much higher state advised prices of
sugarcane coupled with lower ex-mill sugar prices have resulted in declining
profitability and huge cane arrears with sugar mills which in turn has delayed
payment to sugarcane growers. Sugar prices have remained volatile in both domestic
and international markets with much variations in latter. Sugar prices within
domestic markets were found to be co-integrated while there is not such transmission
of prices from international market to domestic market. Sugar and sugarcane prices
were also not found to be co-integrated. Thus the study suggested improvement of
sugarcane productivity, efficient management of inputs by sugar mills and a link
between sugar and sugarcane prices are necessary for bringing improvement in sugar
economy.
Description
t-9490
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