Why sugar mills have been coming up in zones that are facing water scarcity

Young businessman Arvind Shinde is aspiring to make it big in Solapur politics. He has unsuccessfully contested municipal elections but has not lost hope. He says he has a mantra to be successful in politics – have a sugar mill. He draws attention to the fact that in the 2019 Assembly elections, more than 100 sugar barons were in the fray.

Solapur is one of the drought-prone sugar regions in Maharashtra, and in the current cane crushing season, the highest number of sugar mills (38) started operations in this region. Of these, 25 are privately-owned.

The Commission for Agricultural Costs and Prices (CACP), in one of its reports, has said that sugarcane is irrigated in Maharashtra mainly through a canal network of dams, compared to Uttar Pradesh (UP), where large rivers and higher assured rainfall provide irrigation.

Nearly 80 per cent of Maharashtra’s sugarcane is grown in acutely water-scarce areas. In Maharashtra, sugarcane cultivation, which makes up less than 4 per cent of the total cropped area, takes away almost 70 per cent of irrigation water.

Even as UP and Maharashtra lead in sugarcane and sugar production in India, mills coming up in water-scarce areas are leading to massive inequity of water usage, say experts.

Deficit rainfall

India’s biggest State UP, with 75 districts, is divided into two meteorological divisions. East UP, with 42 districts and West with 33 districts, recorded 651.9 mm rainfall, 17 per cent below normal during south-west monsoon last year.

Twelve districts in East UP, and 23 districts in West UP, received deficit rainfall, with five districts in the West experiencing a large deficit.

The situation was better in Maharashtra compared to UP. Eleven districts in drought-prone Vidarbha region received 851.9 mm rainfall, 10 per cent below normal, with Amravati, Yawatmal and Akola experiencing deficit. Eight districts in the drought-prone region of Marathwada received 866.1 mm rainfall, 30 per cent above normal.

If one goes by the expert recommendation, many districts in UP and Maharashtra are not suitable for sugarcane cultivation. The Madhav Chitale Commission report in 1999 said that the minimum average rainfall to sustain sugarcane farming is 1,000 mm.

Still, sugar mills pop up across the landscape, and it is not surprisingly that UP contributes over 36 per cent and Maharashtra over 22 per cent to the total sugarcane production in India, despite water scarcity in many areas.

“This comes at a heavy price. In many districts, even as sugar mills start operations, the localities are dependent on water tankers. It is high time that the government restricts mills in water-scarce areas,” said water activist Sampatrao Pawar. To produce 1 kg of sugar in Maharashtra, 2,515 litres of water is used, according to the CACP. “One has to pay ₹1,000 to ₹1,500 for a 2,500-litre water tanker in summer. The government insisted on drip irrigation for sugarcane after a severe drought in 2016 but nobody bothered,” says Vikram Patil a farmer in Marathwada’s Latur district.

Closure of mills

This sugar season (October 2020-September 2021), 120 sugar mills started operations in UP, while 37 sugar mills were not operational. In Maharashtra, 182 sugar were operational, while 42 never started crushing season, while in Karnataka, 65 mills started operations and 22 remained closed, according to Union Government data.

The Ministry of Consumer Affairs, Food and Public Distribution told the Lok Sabha this month that 493 sugar mills are operational and 202 sugar mills are non-operational in the country. “Non-operation of the sugar mills is normally attributable to non availability of adequate sugarcane, uneconomic size of the plant, lack of modernisation, the high cost of working capital, poor recovery from sugarcane, lack of professional management, overstaffing and financial crunch, ” the Ministry told the Lower House.

“But this has not stopped politicos and private players from starting sugar mills. Private players look at it as a business, and for politicians, it is a lifeline to survive,” admits Ganpatrao Sawant, director of Sangli-based Vasantdada Patil Cooperative Sugar Mill.

The sugar industry was delicensed in September 1998. After delicensing, entrepreneurs were free to set up new sugar mills in any part of the country, subject to fulfilling the conditions laid down in the Sugarcane (Control) Order, 1966.

“India, with over five million hectares under the sugarcane crop, producing over 400 million tonnes of cane and 30 million tonnes of sugar annually, does not require more sugar mills. Instead, new mills producing ethanol directly from cane juice and B-Heavy Molasses is the need of the hour,” says Prakash Naiknavare, National Federation of Cooperative Sugar Factories Limited Managing Director.

Massive subsidies, high returns and support from financial institutions attract entrepreneurs and politicians to start a sugar mill, says agriculture expert Nishikant Bhalerao.