ECONOMICS OF SUGARCANE IN WESTERN MAHARASHTRA Dr. J. S. Kumbhar 1, Dr. B. T. Kamble 2, Dr. S. S. Kaware 3 1 Field officer (II), 2 & 3 Jr. Res. Asstt., State Cost of Cultivation Scheme, MPKV, Rahuri, Dist. Ahmednagar (M.S.) Dept. of Agril. Economics, MPKV, Rahuri, Dist. Ahmednagar (M.S.) Received: 29/05/2017 Edited: 05/06/2017 Accepted: 10/06/2017 Abstract: It is a well-known fact that sugarcane is a most important cash crop. It is grown in two different agro-climatic zones in the World. Amongst the sugarcane growing countries, the highest sugar recovery of 14 per cent is obtained in Queensland in Australia. The sugar recovery is higher in the States of Maharashtra, Gujarat and Karnataka as compared to Andhra Pradesh and Tamil Nadu in tropical region. In North Indian cane growing States of Uttar Pradesh, Uttarakhand, Bihar, Punjab and Harayana having sub-tropical conditions, the sugar recovery varies from 8.67 to 9.75; Bihar recording the lowest sugar recovery (Co-operative sugar 2017). Maharashtra ranks first in recovery of sugar, second in production and fourth in productivity of sugarcane in the country. The methodology was used by selection of 10 districts of Western Maharashtra region has the highest area of sugarcane crop in the state. The secondary data of state cost of cultivation scheme for the year 2015-16 was used and three stage stratified random sampling technique was adopted. The data was compiled, tabulated and analyzed by Simple statistical tools such as arithmetic means, averages, percentages, ratios and costs concepts were used. Cobb Douglas type production function was used for estimating factors influencing total production. The results indicates that, per hectare cost of cultivation of Adsali, pre-seasonal, suru and ratoon sugarcane are ` 251748.52, 248177.90, 215374.71and 140088.20, respectively. The cost benefit ratio of ratoon is more (1.59) followed by Adsali, pre-seasonal and suru sugarcane i.e. 1.35, 1.23 and 1.13 respectively, which indicated that all types of sugarcane planting is profitable for sugarcane growers. Key Words: Sugarcane, costs, returns, input, output prices. 1. Introduction It is a well-known fact that sugarcane is a most important cash crop. In India, cane is grown both in tropical and sub-tropical region. In tropical region Maharashtra, Tamil Nadu, Gujarat, Karnataka and Andhra Pradesh are the important cane growing states, whereas, in sub-tropical region, Uttar Pradesh (U.P.) has the largest area under sugarcane in the country followed by Haryana, Bihar, Uttarakhand and Punjab, respectively. The sugar recovery is higher in the States of Maharashtra, Gujarat and Karnataka as compared to Andhra Pradesh and Tamil Nadu in tropical region. In North Indian cane growing States of Uttar Pradesh, Uttarakhand, Bihar, Punjab and Harayana having sub-tropical conditions, the sugar recovery varies from 8.67 to 9.75; Bihar recording the lowest sugar recovery (Co-operative sugar 2015). Maharashtra is the leading State in India for sugarcane cultivation next only to Uttar Pradesh occupying an area of around 14 per cent with respect to total area under sugarcane crop in country in the year 2015-16. Maharashtra ranks first in recovery of sugar, second in production and fourth in productivity of sugarcane in the country. The productivity of the crop primarily depends on the extent of levels of resource use and total management of the crop. The inputs play a significant role in agricultural production. The costs and returns analysis for adsali, pre-seasonal, suru and ratoon sugarcane will be helpful to examine the relative profitability of these crops in the region in 247
order to ensure sugarcane supply to the sugar factories through extensive cultivation, formulate sugar price policy and fair remunerative price. In view of this, Economic Analysis of Sugarcane in Western Maharashtra is under taken for study and with the following objectives, 2. Objectives To estimate the resource use pattern, per hectare costs & returns of sugarcane in Maharashtra state. 3. Methodology In Western Maharashtra 10 districts were selected as the region has the highest area, production and productivity of sugarcane crop in the state. The secondary data regarding sugarcane crop were collected in the state cost of cultivation scheme. The three stage stratified random sampling technique was adopted as tahsil, village and sugarcane cultivator as ultimate unit of sampling. The district and village having highest area under sugarcane crop were selected. The secondary data was collected for the year 2015-16 by cost accounting method was used for the study. The data was compiled, tabulated and analyzed by Simple statistical tools such as arithmetic means, averages, percentages, ratios and costs concepts were used. Cobb Douglas type production function was used for estimating factors influencing total production. 4. Results and Discussion 4.1 Sugar Industry The sugar industry in Maharashtra has registered a phenomenal growth during the postindependence period, contributing for stabilization of sugar production and reduction in the chronic shortages of sugar in the country. The number of sugar factories which were hardly 13 at the beginning of the first five year plan period, increased to 173 in the year 2015-16. Out of 173 sugar factories, 96 are co-operative and 77 are private. 4.2 Area, production and productivity of sugarcane in India and Maharashtra Table 1 reveals that the area under sugarcane in India is fluctuating over a period of time. It increased continuously from the year 1997-98 to 2002-03 and thereafter declined and again increased in the year 2006-07 and then decreased and productivity declined from 71.10 tonnes /ha. to 68.60 tonnes /ha. In the case of Maharashtra, the area, production and productivity of sugarcane is fluctuating over a period of time. It clearly indicates that the production of sugarcane in India and Maharashtra have increased only due to area expansion under sugarcane and slightly due to productivity improvement during the period. Table 1 Area, Production and Productivity of sugarcane in India and Maharashtra (Area 000 ha., Production 000 tones, Productivity tonnes /ha.) India Maharashtra Year A P Y A P Y 1 1997-98 3930 279541 71.10 460 41805 91.88 (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) 2 1998-99 4055 288722 71.20 509 45329 89.27 3 1999-00 4220 299324 70.90 593 53332 90.00 4 2000-01 4316 295956 68.60 595 49569 83.27 5 2001-02 4411 297208 67.40 578 45140 78.07 6 2002-03 4520 287383 63.60 573 42617 74.00 7 2003-04 3938 233862 59.40 442 25668 58.00 8 2004-05 3662 237088 64.80 327 23914 73.00 9 2005-06 4201 281172 66.90 501 38814 78.00 10 2006-07 5151 355520 69.00 1049 78568 74.90 11 2007-08 5043 340557 67.50 1088 80599 74.00 248
12 2008-09 4408 294656 66.80 770 57042 74.00 13 2009-10 4202 277750 66.10 736 56551 76.80 14 2010-11 4886 342382 70.10 965 81896 84.90 15 2011-12 5085 361037 71.70 1022 86733 84.90 16 2012-13 5064 338963 66.90 937 62175 66.40 17 2013-14 5012 350021 69.80 937 76555 81.70 18 2014-15 5067 362333 71.50 1030 84699 82.20 19 2015-16 4927 348448 70.10 987 73680 78.10 20 2016-17 4521 309984 68.60 633 50084 79.10 (15.03) (10.89) (-3.51) (37.60) (19.80) (-13.90) Source: Cooperative Sugar, March 2016, Vol.48, and 7 & VSI, Pune (Figure in the parentheses indicates the percentage change over the base year 1997-98) 4.3 Statewise area, production and productivity of sugarcane of sugar and sugar output in India is 14.00 per cent, 16.15 per cent and 33.52 per cent, respectively. Statewise area, production and productivity, Maharashtra state ranks 1 st in sugar production sugar production, sugar recovery for the year 2016- (50084 thousand tones) and average sugar recovery 17 is presented in Table 2. (11.33%), ranks 2 nd in area under sugarcane and It can be revealed from Table 2 that, the Maharashtra s share in the total acreage, production sugarcane production. However, Maharashtra ranks 5 th in productivity of sugarcane (2016-17). Table 2: Area, production and productivity, sugar production and sugar recovery in major states of India (2016-17) Particulars State India % of M. S. to India 1 st Rank in India M.S. U.P A.P. KN. T.N. 1 Area ( 000 ha.) 633 2160 103 440 237 4521 14.00 U.P. 2 Sugarcane production ( 000 tones) 50084 133704 8091 33440 24680 309984 16.15 U.P. 3 Productivity West Bengal 79.10 61.90 78.60 76.00 104 68.60 -- (Tones/ha.) (119.00) 4 Sugar production 8424 6841 551 4049 1362 25125 33.52 M.S. ( 000 tones) 5 Ave. Sugar recovery (%) 11.33 10.61 9.35 10.74 8.74 10.62 -- M.S. Source: Cooperative Sugar, March 2016, Vol.48, and 7 4.4 Cost Estimation Procedure Standard cost concept viz; cost A, cost B and cost C are used for estimating the per hectare and per quintal cost of cultivation. Working capital = Hired human labour + Bullock labour + Machine power +Seed + Manures + Fertilizers +Irrigation charges +Bio-Fertilizers +Plant protection charges + Incidental charges +Repairs +Insurance premium Cost A = Working capital + Interest on working capital (6 %) + Land revenue + Depreciation. Cost B = Cost A + Rental value of land (1/6 th of Gross produce -Land revenue) + Interest on fixed capital (10% of capital investment) Cost C = Cost B + Family human labour (25 % more wages) 249
4.5 Costs and returns of Sugarcane Table 3: Planting typewise Cost and Returns of Sugarcane (2015-16) Preseasonal Items Adsali Suru Ratoon 1 Cost-A (`) 166457.41 164571.24 144761.93 36994.39 2 Cost-B (`) 227729.84 218362.77 189714.53 120607.72 3 Cost-C (`) 251748.52 248177.90 215374.71 140088.20 4 Per quintal Cost (`/q) 166.12 184.27 201.19 139.22 5 Main Yield (q/ha) 1400.83 1254.91 995.40 914.22 6 Rate (`/q) 230.00 230.00 230.00 230.00 7 Main Produce Value (`) 322190.57 288629.52 228941.38 210269.93 8 Bye Produce (q/ha) 116.45 97.16 89.00 77.68 9 Bye produce value (`) 19049.85 16940.52 15107.56 164.97 10 Gross value (`) 341240.42 305570.04 244048.94 223084.07 11 B:C Ratio 1.35 1.23 1.13 1.59 Source: State Cost of Cultivation Scheme, MPKV, Rahuri It can be revealed from the Table 3 that, per hectare cost of cultivation of Adsali, pre-seasonal, suru and ratoon sugarcane are ` 251748.52, 248177.90, 215374.71and 140088.20, respectively. The variation in cost of cultivation is due to different periods of sugarcane planting i.e. Adsali (18 months), pre-seasonal (15 months), suru (12 months) and ratoon (12 months). The cost benefit ratio of ratoon is more (1.59) followed by Adsali, pre-seasonal and suru sugarcane i.e. 1.35, 1.23 and 1.13 respectively, which indicated that all types of sugarcane planting is profitable for sugarcane growers. Table 4: S. M. P./ FRP declared by Central Government Year Recommended by State Government (APC, Mumbai) Declared by Central Government % Gap to price declared by CACP 1. 2003-04 68.67 73.00 6.31 2. 2004-05 69.50 74.50 7.19 3. 2005-06 79.39 79.50 0.14 4. 2006-07 86.02 80.25-6.71 5. 2007-08 86.97 81.18-6.66 6. 2008-09 91.37 81.18-11.15 7. 2009-10 100.00 129.84 29.84 8. 2010-11 112.00 139.12 24.21 9. 2011-12 137.00 145.00 5.84 10. 2012-13 162.00 170.00 4.94 11. 2013-14 174.00 210.00 20.69 12 2014-15 222.00 220.00-0.90 13 2015-16 252.00 230.00-8.73 14 2016-17 271.00 230.00-15.13 15 2017-18 267.00 255.00-4.49 Note: Year 2001-02 to 2005-06 SMP for 8.5 per cent recovery Year 2006-07 to 2008-09 SMP for 9 per cent recovery Year 2009-10 to 2013-14 FRP at 9.5 per cent sugar recovery. The SMP/FRP declared by central Govt. was always less than the price recommended by state Govt. with few exception years 2006-07 to 2008-09 and 2014-15 which indicates the gap ranging from 0.90 to 11.15 per cent. It means the price 250
recommended by state APC is higher than the price declared by central Govt. 4.6 India s Major Export Destinations and Imports Sources Exporting Countries: The major export destinations for India in 2013-14 were Sudan, Iran, Sri Lanka, and UAE. The highest decrease in the growth of India s sugar export was recorded for UAE in 2013-14 compared to previous year. 251 Importing Countries: Substantial part of India s sugar imports coming from Brazil in 2013. Germany, USA, Netherland, and Pakistan also exporting sugar to India. India s sugar trade balance is positive except in the year 2009-10. However, sugar export is fluctuating during period under study. Table 5: Trade Flow of Sugar in India during 2009-10 and 2014-15 (Qty-Lakh Tonnes) Year Export Import Trade Balance 2009-10 0.42 25.51-25.09 2010-11 17.11 11.98 + 5.13 2011-12 27.38 0.99 +26.39 2012-13 27.91 11.21 +16.70 2013-14 24.60 8.81 +15.79 2014-15 15.23 14.20 +1.03 Source: Department of Commerce, 2015 4.7 Dual Pricing Of the total sugar produced, 70 % has been used for confectionary, bakery, hotel industry and little bit of it goes for home consumption (30 per cent), which needs to duel pricing policy for domestic and industrial use for the sake of benefit to sugarcane factories and sugarcane growers. 4.8 Conclusions In Maharashtra the number of sugar factories, which were hardly 13 at the beginning of the first five-year plan period, increased to 169 in the year 2014-15. Out of 169 sugar factories, 96 are cooperative and 73 private are in operation. sugarcane i.e. 1.35, 1.23 and 1.13 respectively, which indicated that all types of sugarcane planting is profitable for sugarcane growers. The Central Government declares F&RP for sugarcane as a whole on recovery basis irrespective of planting types (i.e. for 9.5 per cent and above). The F&RP is given in Maharashtra state on weight basis and cost of production for different planting types i.e. Adsali, Suru, Pre-seasonal and Ratoon differs due to crop duration. Therefore, while declaring F&RP as whole, the planting type and sugar (bricks) may be considered for sugarcane crop. The area and production of sugarcane increased, but the productivity declined in India and Maharashtra. It clearly indicates that the production of sugarcane in India and Maharashtra have increased only due to area expansion under sugarcane and very little due to productivity improvement during the period under study. The cost benefit ratio of ratoon is more (1.59) followed by Adsali, pre-seasonal and suru References 1. Cooperative Sugar, March 2016, (Vol.45, 7) 2. Department of Commerce, Govt. of India (2015). 3. CPMCC Scheme, Deptt. of Agril. Economics, MPKV, Rahuri (1993-2016). 4. Economic Survey of India and Maharashtra, (2014, 2016). 5. Ph. D. Thesis, submitted to the MPKV, Rahuri by Dr. V.G.Pokharkar (2001). Whether the income from byproducts of sugarcane like ethanol, bagas, molasses, electricity, paper etc. is counted or not while deciding sugarcane prices is a big question mark? Of the total sugar produced, 70 % is used by confectionary, bakery, hotel industry and little bit of it goes for home consumption (30 per cent) which calls for dual pricing.