CHAPTER 6 COMPARISON BETWEEN THE SUGAR INDUSTRY OF INDIA, BRAZIL, EUROPEAN UNION, THAILAND AND AUSTRALIA

CHAPTER 6 COMPARISON BETWEEN THE SUGAR INDUSTRY OF INDIA, BRAZIL, EUROPEAN UNION, THAILAND AND AUSTRALIA

CHAPTER 6 COMPARISON BETWEEN THE SUGAR INDUSTRY OF INDIA, BRAZIL, EUROPEAN UNION, THAILAND AND AUSTRALIA 6.1 Comparative analysis of the Indian, Brazilian, EU- 25, Thailand and Australian industry on factors of competitiveness

CHAPTER 6 COMPARISON BETWEEN THE SUGAR INDUSTRY OF INDIA, BRAZIL, EUROPEAN UNION, THAILAND AND AUSTRALIA Sugar is one of the most important commodities produced and traded in world agricultural markets. The industry has been expanding in and processing over the decades. Up to 30 percent of produced is physically traded in the global area. Nearly 60 percent of the globally traded is through preferential agreements and Free Trade Agreements, hence only 40 percent of the globally traded is freely traded, i.e., 12 percent of the produced in the world. Hence the global market is said to be residual in nature. Brazil is the world s largest producer and exporter, Australia is also a big player in the world market and has a high exposure to the international prices and Thailand being an Asian country is also an aggressive player in the global trade. In this chapter, an attempt has been made to compare the Indian industry with those of Brazil, European Union, Thailand and Australia. 201

6.1 Comparative analysis of the Indian, Brazilian, EU- 25, Thailand and Australian industry on factors of competitiveness The factors of competitiveness are compared and contrasted as listed in the table below (2005-06) Table 6.1: Comparative analysis of the Indian, Brazilian, EU-25, Thailand, and Australian industry on factors of competitiveness SI. No Factors of competitive ness 1 Recovery rate (%) 2 Crushing period / season 3 Average Crushing capacity (TCD) 4 Average number of crushing days in a year 5 Cost of per tonne of white (US $) Brazil EU-25 Thailand Australia India Belgaum June- May 14.6 13 11.3 13.5% 10.17 (Varies between 9%-11.5 %) March- Septembe r 9,200 Above 10000 October- April May- Decembe r 10,300 Above 10000 186 115 104 165 22-25 week season October- June district 11.02 (Obtained from survey) October -June 3500 3468 97 161 210 400 360 290 310 300.52 6 Quality of refined (ICUMSA) 100 & 45 (Average 50) 45 100 45-100 70-200 (Average above 100) 70-90 (& 45 by SRS) 202

7 Manufacture of raw (for export) 8 Quality of raw (ICUMSA) 9 Own factories in other countries 10 Cost of cane or beet /MT 11 Induced cyclicity 12 Retail price of per MT 13 Export Price per MT of refined (Internatio nal white price = 325) Yes No Yes Yes Very less 8% of mills 500-800 N/A 1800-2200 (Average above 2000) 600-700 & Standard Brad One: 200 800-1200 800-1200 Yes Yes Yes Yes No No 17 33 for A- beet used to produce A-quota and 23.5 for the B- beet used to produce B-quota. 25-26 22.4 17-22.5 No No No No Yes Yes 19.5-20.5 558 900 535 781 405 405 236-244/ MT (FOB) 259/ MT (FOB) 298-316/MT 316850 tonnes exported (05-06) of value Rs.557.1 0 crores = Rs. 1758 per quintal= US $382.17 312.52 203

14 Export Price per tonne of raw World price 180-210 (FOB) applicabl e $214 (FOB) 15 Sugar million metric tonnes World = 141.31 million MT 16 Area under cane (or beet) cultivation (million hectares) World area under cane cultivation = 20.42million hectares 17 Productivity of cane (or beet) cultivation (tonnes/ha) World average productivity = 65.2 tonnes/ha 18 Sugarcane (or beet) (million tonnes). World = 1333.2 19 Per capita consumptio n (kilograms 28.13 18.68 4.59 5.39 15.16 0.627 6.45 2.164 (Beet) 72.3 8.61 (beet) [Equivale ntto 15 tonnes of cane] 386.2 available 59.0 (66.4) 0.970 0.423 4.6 0.1375 98.9 62.8 73.42 64.4 36.0 289.6 5.73 58 34 36 46 21 (31.5 in Urban 204

per annum) 20 Type of exported 21 Percentage of World s total 22 Percentage of World s total exports Raw & Refined Refined Raw & Refined Raw & Refined areas) Mainly Plantatio n white Mainly Plantatio n white 19% 15% 6% 4% 18% 30% 15.2% 10% 12% Negligibl e (around 2%) & intermitte nt 23 Size of land holdings Large Large Small Large 77 hectares Small 2-4 hectares Small 2-4 hectares 24 Dependence on exports compared to domestic market 25 Exports as a percentage of total - 26 CAGRof 27 Percentage of world s consumptio n 28 Percentage of world s ethanol 29 Method of cane harvesting Moderat e due to ethanol program (0.33:1) Shifting from manual Moderate (0.33:1) High (2:1) High (3:1) Low (0.1 to 0.2:1) intermitte ntly. Low 56% 20% 67% 72% 4% 3% to 4% on average 5.7% 0.8% 0.4% 1.0% 2.9% 7.0% 10.7% 1.6% 0.7% 14.0% 36% 6% Less than 1% Mechanis ed Manual Less than 1% Mechanis ed Manual 5% Manual 205

to mechanis ation Source: i. www.agribusinessdwd.com/acane/statistics.pdf accessed on 16-02- 2009 ii. www.canecrops.com/introduction accessed on 16-02-2009 iii. www.illovo.com/worldof/intemationalsugarstats.htm. accessed on 16-02-2009 and various other sources iv. www.ec.europa.eu/agriculture/agrista/2007/table/en43.htm v. Baneijee Shantanu (August 2004), Determinants of International Competitiveness: A Comparative Study of the Sugar Industry in Australia, Brazil and the European Union, accessed from http://eprints.qut.edu.au/16032/2/02whole.pdf on 28-02-2009 vi. KPMG report (June 2007), The Indian Sugar Industry-Sector Roadmap 2017 206