An economic analysis of area, production, yield and export of Sugarcane in India. by Ms. Joel Mary John [a] & Dr. Sujata S.

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1 An economic analysis of area, production, yield and export of Sugarcane in India. by Ms. Joel Mary John [a] & Dr. Sujata S. Mali [b] Abstract India is an agriculture based economy. 43% of India s territory comes under agricultural activities. Globalization and agriculture in India are both intricately connected to each other as agriculture in India prevails over all other sectors because it plays a pivotal role in the socio cultural life of its people. Hence, it is agriculture that is the most influential field as compared to others in India. It is also most affected due to globalization in terms of export and import of agricultural commodity. Sugarcane is one of the several species native to the warm temperate tropical regions of South Asia and it is a cash crop. It is used as a livestock fodder and also for the production of sugar. Brazil is the largest producer of sugar cane in the world. The next five major producers, in decreasing amounts of production, were India, China, Thailand, Pakistan and Mexico. Brazil led the world in sugarcane production in 2013 with a TMT harvest.india was the second largest producer with TMT tons, and China the third largest producer with TMT tons harvest.the average worldwide yield of sugarcane crops in 2013 was tons per hectare. The most productive farms in the world were in Peru with a nationwide average sugarcane crop yield of tons per hectare. The present study is based on secondary data (time series data) sources collected for a period of fifteen years from The secondary data is collected from various published and unpublished sources, the present study is covering various aspects related to year wise, state wise and country wise data on area, production and productivity of sugarcane, production, consumption, export of sugar in India etc. In the present analysis of data based on various statistical tools includes percentage, trend analysis annual growth rate and regression method and other appropriate statistical tools and the same is depicted by pictorial presentation. Keywords: Sugarcane, Sugar, Area, Production, Yield, Consumption, Population and Export [a] Ms. Joel Mary John #16, Lijoel cottage, Behind Christ the king school, Ramamurthy Nagar, Bengaluru Mob: [b] Dr. Sujata S. Mali Assistant Professor, Department of M.A Economics, Mount Carmel College, Bengaluru-52. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.1

2 1.1 Introduction: Sugarcane is one of the several species native to the warm temperate tropical regions of South Asia and it is a cash crop. It is used as a livestock fodder and also for the production of sugar. Sugarcane belongs to the grass family Poaceae, an economically important seed plant family that includes maize, wheat, rice, and many forage crops. Sugarcane is an old energy source for human beings and, more recently, a replacement of fossil fuel for motor vehicles. Sugarcane is a tropical, perennial grass that forms lateral shoots at the base to produce multiple stems, typically it is three to four meters high and about five cm in diameter. All sugar cane species interbreed and the major commercial cultivars are complex hybrids. The stems grow into cane stalk, which when mature constitutes approximately 75% of the entire plant. A sugarcane crop is sensitive to the climate, soil type, irrigation, fertilizers, insects, disease control, varieties, and the harvest period. The average yield of cane stalk is tonnes per hectare per year. India is an agriculture based economy. 43% of Indias territory comes under agricultural activities. Globalization and agriculture in India are both intricately connected to each other as agriculture in India prevails over all other sectors because it plays a pivotal role in the socio cultural life of its people. Hence, it is agriculture that is the most influential field as compared to others in India. It is also most affected due to globalization in terms of export and import of agricultural commodity Origin of the Sugarcane: It is stated that the cradle of cultivated sugarcane is the region where two wild species ie., saccharum spontaneum and robustum were found. Robustum is derived from; Natural crossing between spontaneum and miscanthis foridulus and the origin is new guinea, modern sugarcane is a complex hybrid of two or more of five species of the genus saccharum. It belongs to family graminnae, class gramineae, class monocotyledons and order glumaceae sub family panicoidae, tribe andripongoneae and sub tribe saccharininea. The cultivated canes belong to two main groups (a) thin, hardy north Indian types Sbarberi and the Chinese S.Sinense and (b) thick, juicy noble canes S.Officinarum. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.2

3 1.3. History: Sugarcane was first grown in South East Asia and Western India around 327 B.C. It is theorized that sugarcane was first domesticated as a crop in New Guinea around 6000 BC.It was introduced to Egypt around 647 A.D. and, about one century later, to Spain. i.e. (755A.D.). Since then, the cultivation of sugarcane was extended to nearly all tropical and sub-tropical regions. Portuguese and Spaniards took it to the New World early in the XVI century. It was introduced to the United States of America in the year 1741.the Sugarcane growing countries of the world are lying between the latitude 36.7 north and 31.0 south of the equator extending from tropical to subtropical zone. New Guinean farmers and other early cultivators of sugarcane chewed the plant for its sweet juice. Early farmers in Southeast Asia and other places have also boiled the cane juice down to a viscous mass to facilitate transportation, but the earliest known production of crystalline sugar began in northern India. The earliest evidence of sugar production comes from ancient Sanskrit and Pali texts Sugarcane in India India has the largest area under sugarcane cultivation in the world and it is the world s second largest producer of sugarcane after Brazil. The cane production registered a dramatic increase of 93 per cent in the decade as a result of diversification of agriculture but this spurt slackened to 14.9 per cent growth between and mainly as a result of the farmers withdrawal of land under cane owing to internal market fluctuations. However, production began looking up again with the establishment of sugar mills during the decade and growth rate was 22 per cent. The production of sugarcane reached an all time record million tonnes in after which varying trends have been observed.as in case of production area under sugarcane, cultivation registered a rapid increase from 1.7 million hectares in to 4.1 million hectares in after which the area under sugarcane cultivation increased at a slow rate. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.3

4 Top ten sugarcane producing states in India: Table 1: Sugarcane Producing States in India Rank Name of the States Production- (000MT) 1 Uttar Pradesh Maharashtra Karnataka Tamil Nadu Andhra Pradesh Bihar Gujarat Haryana Uttarakhand Punjab Source: Indiastat.com II. Review of literature D.V.Ragnekar (2014): states that how sugarcane has emerged as one of the major agro industries in the rural areas of India during the last few decades. He views that there is fairly a strict government control on sugar and its by products, the industry faces some problems while receiving a certain amount of protection from the government. Murali P, Balakrishnan (2012): in his report shows how in the recent past, labour scarcity is coupled with high labour wage rate and has greatly affected the irrigation and harvesting of sugarcane crop in time.he pointed out that it has reduced sugarcane area from 3.91 lakh ha in to 3.14 lakh ha in Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.4

5 III. Statement of the problem The study emphasizes on the overall area, production and yield of sugarcane in India. The trend pattern of export and production of sugarcane has been undertaken to know the direction of India s export of sugar. The top five states producing sugarcane and their contribution to India for the time period to IV. Scope of the study In this study an attempt has been made to evaluate various aspects of sugarcane production, area, productivity and exports. The finding of this study could be gainfully utilized by the administrators, policy makers, scientists and extension workers to know about the status of sugarcane production and to make the cultivation of sugarcane more profitable and economical. V. Objectives of the study: The Main Objectives of the study: 1. To Study the Annual Growth Rate of Area, Production and Yield of Sugarcane in India from to To Analyse the top five state-wise production of sugarcane in India from To calculate the percentage share of sugar to GDP in India ( to ) 4. To Compute the Trend Value of sugar exports for to To fit a Multiple Regression Model and Establish a Relationship between Production and its determinants. 6. To examine the relationship between the total population and total sugarcane production in India during the period to VI. Data and methodology: The present study is based on secondary data (time series data) sources collected for a period of fifteen years from The secondary data is collected from various published and unpublished sources. The data is collected from the Economic Survey, RBI, Ministry of Statistics/Industry/Finance, and Indian Council for Agricultural Research (ICAR). the present study is covering various aspects related to year wise, state wise and country wise data on area, production and productivity of sugarcane, production, consumption,export of sugar in India etc. In the present analysis of data based on various Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.5

6 statistical tools includes percentage, trend analysis annual growth rate and regression method and other appropriate statistical tools and the same is depicted by pictorial presentation. VII. Analysis and Interpretation: Objective 1. : to study the annual growth rate of area, production and yeild of sugarcane in india from to Table 2: Annual Growth Rate of Area, Production and Yield of Sugarcane in India ( ) YEAR AREA (LAKH /HA) PRODUCTION (MILLION TONNES) YIELD (MILLION TONNES / HA) Source: department of food and public distribution and agricultural statistics (for production and area of sugarcane) Annual growth rate is calculated using the formula: Present value past value 100 Past value Table 2. shows the Annual Growth Rate of Area, Production and Yield of Sugarcane in India from Based on the Area, Production and Productivity of sugarcane the Annual Growth Rate has shown a mixed trend, in terms of increase and decrease. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.6

7 The Growth Rate of Area under Sugarcane was highest in the year with 22.58% and the area under harvest was lowest in the year and with -7 and % The Growth Rate of Production of Sugarcane was highest in the year with 18.59% and was the lowest in the year with %. The Growth Rate of Yield of Sugarcane in India was highest in the year with 8.53% and was lowest in the year with -7.56%. Graph 1: Annual Growth Rate of Area, Production and Yield of Sugarcane in India ( ) Above graph-1 depicts the Annual Growth Rate of Area, Production and Yield of sugarcane in India from period The growth rate of sugarcane under area, production and productivity faced a lot of fluctuations over the years. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.7

8 Objective 2: to analyse the top five state -wise production of sugarcane ( ) Table -3: The Top Five State-Wise Production of Sugarcane in India (In percentage) YEAR UTTAR PRADESH MAHAR- ASHTRA KARNATA KA TAMIL NADU ANDRA PRADESH OTHERS TOTAL Source: Agricultural dept of India, CMIE report The Above Table -3 shows the Total Percentage of Sugarcane produced by the top five sugarcane producing states of India from Uttar Pradesh and Maharashtra were the top two states who contributed more to India, followed by Karnataka, Tamil Nadu, Andhra Pradesh and the other states. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.8

9 Graph - 2 Depicts the Total Percentage of the Five Major States towards the Production of Sugarcane in India from Above graph - 2 States that, the explanation in the above is cleared with the help of pictorial representation which shows that among the top five states Uttar Pradesh stands at the first place in terms of sugarcane production even though there were ups and downs.this was due to more facilities provided by the government to the state in terms of subsidy, infrastructure development, technology etc., there were also many incentives provided by the government to the other mentioned states because of which they are one among the top five sugarcane producing states of India. Objective 3.: to calculate the percentage share of sugar exports to the india gdp from Table -4: Sugar Exports share to Total GDP to YEAR EXORTS GDP % SHARE OF SUGARCANE TO GDP ,852, Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.9

10 Source: department of economic analysis and processing (NABARD) Table 4 shows that the Exports and Total GDP in India during the period to 2013 to Here, the Total sugar exports witnessed fluctuations over the years,in the year the sugar exports were at whereas from the exports showed an increasing trend,followed by the years we can see a fall in the exports,again there have been an increasing trend in the further three years The lowest export in India was due to the semi-recession faced by the US is one of the India s biggest trading partners. After The terrorist attack on the World Trade Centre. Thus due to the reasons the GDP also showed fluctuations over the years. Graph 3.Total Sugar Exports Share to Total GDP from to Graph-3 shows that the Exports and Total GDP in india during the period to 2013 to Here, the Total sugar Exports witnessed fluctuations in exports and the highest was in , the lowest was in and After there has been an increase in the share of %age share of sugar exports. Later in the year shows a slight decrease in the %age share of sugar to GDP. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.10

11 As per, table-5. Depicts the actual and trend value related to the exports of sugar over the fifteen years. In there were crores export but the quantity has increased to crores during The highest exports was in the year with crore units and with crore units. The exports of sugar was lowest in the year and being and crore units. Objective 4. : to compute the trend value of sugar exports in india from Table 5: Trend of Sugar Exports in India (in crore units) YEAR EXPORTS(Rs. Crore) X X2 XY TREND VALUE Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.11

12 Graph 4- Shows the Trend of Sugar Exports in India ( ) Above Graph-4 depicts a positive trend in the export of sugar. The graph shows a sharp fall in the export of sugar during the year , but showed a continuous increase in there number from onwards. The projected increase in the exports for the year to are and respectively. The increase in export of sugar is mainly due to the following reasons: Improvement in the quality and quantity of sugar, Better infrastructure facilities provided by the government of India, Better irrigational facilities and bio technology for cultivating quality crops. Objective 5.: to fit a multiple regression model and establish a relationship between production and its determinants: Table 6.: Shows the Area Production and Yield of Sugarcane that has been used for the Calculation of Regression AREA YIELD PRODUCTION (MILLION TONNES) YEAR (LAKH /HA) (TONNES / HA) Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.12

13 Source : ICAR The above study (Table-6) lays its focus on production of sugarcane to be dependent on the independent variable i.e. area and yield. Thus the functional relationship is outlined below: Y=α+β1X1+β2X2+µ Where Y is production, XI is total area, X2 is total yield Hypothesis formulation: Null hypothesis (H0): there is no significant impact of the independent variable on the dependent variable. Β1 = β2 = 0 Alternative hypothesis (H1): there is a significant impact of the independent variables on the dependent variables. Β1 β2 0 A multiple regression model for the period of is fit and run on the annual figures with the help of excel tools and it bears the following result. Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 14 The model explains R square variations in the dependant variables production caused due to the independent variables (area and yield ) and the remaining 0.9% variations is due to residual factors such as exports, consumption etc. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.13

14 ANOVA df SS MS F Significance F Regression E-17 Residual Total Standard Lower Uppe Lower Upper Coefficients Error t Stat P-value 95% r 95% 95.0% 95.0% Intercept E Xvariable E E Xvariable The P value depicted in the table is less than 0.05; hence the model is significant at 5% level of significance. Therefore H0 is rejected and H1is accepted, which states that there is a significant impact of the stated independent variables on the dependent variable (µ) production. Objective 6.: to examine the relationship between the total population and total production of sugarcane in india Table 7.: Total Population and Total Sugarcane Production in India to (In Million Tons) Year Sugarcane Production Total Population Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.14

15 Source : Economic Survey, RBI, Ministry of Statistics/Industry/Finance and Agricultural statistics. Table-7 shows the Total Population and Total sugarcane Production in India during the time period to , it is explained based on the Malthusian theory. Malthusian theory states that population tends to increase faster than food supply, with inevitably disastrous results, unless the Increase in population is checked by moral restraints or by war, famine and diseases. This objective has associated Total Population and total Food grains Production. The guideline for the same is from the 1 st postulate of the Malthusian theory related to population which did associate Food grains Production (that increase in arthmetic progression) and Population (that increase in geometric progression). Therefore based on the above table we can see that the population is increasing over the years and that the food supply cannot meet the increasing population. Thus we accept the Malthusian theory as it prove s that the population increases faster than the food supply until and unless the population is affected by any disastrous effect. VIII. Recent government policies for sugarcane: On November 18, 2015, the Government of India s (GOI) Cabinet Committee on Economic Affairs (CCEA) approved a sugarcane production subsidy of INR 4.50 per quintal for sugarcane crushed during MY 2015/16 (Oct-Sept). The central government, with effect from May 11, 2012, allowed sugar exports without restrictions under Open General License (OGL), subject to prior registration with the Directorate General of Foreign Trade. Sugar mills, exporters and importers are free to export and import sugar as per their commercial prudence Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.15

16 . To increase the area of cultivation and production in the country, the GOI has implemented the Sustainable Development Fund of Sugarcane Based Cropping System Area under Macro Management Mode of Agriculture program in various sugarcane growing states. The Tamil Nadu government has set the state-advised price of sugarcane at Rs 2,850 a ton, this price adds Rs 550 including transport charges to the centre-advised Fair and Remunerative Price at Rs 2,300 a tonne for the sugar year A bill seeking to raise the sugar cess ceiling from Rs 25 to Rs 200 per quintal was passed by the Lok Sabha in 2015, The Sugar Cess (Amendment) Bill 2015 was passed by a voice vote in the House which was boycotted by Congress over alleged "political vendetta" by the government. IX. Conclusion: Sugarcane is an important commercial crop in the country, occupying about 4.36 million hectares. Sugarcane occupies about 3.0% of the total cultivated area and it is one of the most important cash crops, contributing about 7.5% of the gross value of agricultural production in the country. About 50 million farmers depend on sugarcane cultivation for their livelihood and equal numbers of agricultural labourers earn their living by working in agricultural farms. Throughout the ages, sugarcane remained an important commercial crop of agriculture and trade in India contributing substantial revenue by way of tax revenue and duties. About 50 million farmers depend on sugarcane cultivation for their livelihood and an equal number of agricultural labourers earn their living by working in sugarcane farms. Agriculture in India prevails over all other sectors because it plays a pivotal role in the socio cultural life of its people. Hence, it is agriculture that is the most influential field as compared to others in India. Sugarcane is a primary raw material for all major sweeteners produced in the country and Government is adopting many measures to increase the production of sugarcane as mentioned above. There seems to be a great prospective for development of sugarcane in India. Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.16

17 X. References: Books: 1) T.S Devaraja, financial performance of Agro-Based Industries: The case of sugar Industry in Karnataka, 5th edition, anmol publishers. 2) R C Tyagi, prospects of sugar industry in India,1st edition, Mittal publisher. Articles : 1) Shrivastava, S Solomon (2013) sugarcane cultivation and sugar Industries in India historical perspectives, sugar tech. 2) Agricultural economics research, year 2012, volume-24 3) Indian Journal of sugarcane technology 4) Analysis of farmers knowledge about selected sustainable cultivation practices in sugarcane, Karnataka. J agric.sic, 20(3) a. Ratan lal yadav, economics of sugarcane farming 5) S.Senkar,Indian economy, problems, policies and developments 6) Glyn James volume 10 of world agriculture series 7) Census impacts sugarcane survey in Karnataka, Journal of economics and social research. 8) Agricultural department of India,CMIE reports Web links: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) Aano bhadraa krathavo yanthu vishwathaha -"Let the noble thoughts come to all from all directions". Page No.17