Challenges for the sugarcane sector in India

Published on
November 3, 2022

The sugar sector plays a crucial role for India’s economy, but faces challenges in terms of stagnating production, price regulations, unstable sugarcane market and water scarcity. A recent report by Wageningen University & Research shows how a program implemented by Solidaridad India has contributed to adoption of good agricultural practices, including the use of improved irrigation practices, as well as improvements in productivity. The aim of the programme was to enhance both sustainability of sugarcane growing and to raise smallholder incomes. The Sustainable Water Fund (FDW) provided funding to implement the program by the Dutch Ministry of Foreign Affairs and managed by the Netherlands Enterprise Agency.

The challenges for the sugar sector

Eighty per cent of sugar produced worldwide comes from sugarcane, the remaining 20% comes from sugar beets. Brazil, India and China are the top three producers of sugarcane globally. India alone contributes 17% of total production. It is estimated that by 2030, India will require about 520 million tonnes of sugarcane to keep up with domestic consumption of sugar and ethanol. Considering that there is little scope for area expansion, this means they will have to produce around 100-110 tonnes more per hectare in 2030. Compare this to the actual 70 tonnes per hectare and the challenge is obvious. However, productivity has stagnated in the last 20 years.

Sugar, being an essential commodity, is controlled through various regulatory mechanisms in India including minimum prices and command areas. The sugar price for consumers, however, is not regulated which makes sugar manufacturers vulnerable. In addition to stagnating production, price regulations and the unstable sugarcane market there is also an increasing lack of water. This affects sugarcane farming areas as sugarcane is high in irrigated water use. The situation is worsened by climate change which may reduce sugarcane yields.

Impact of Solidaridad project

Solidaridad asked Wageningen University and Research to evaluate the impact of their project. Therefore, FDW proposed a large-scale roll-out of irrigation techniques and farming practices that have proven to raise water productivity and farm income of sugarcane farming in smallholder settings in India. Major activities of the project included training on good agricultural practices (e.g., water conserving practices), introduction to improved irrigation systems (e.g. training on drip irrigation and distribution of crop calendars and drip manuals), and farmer trainings on entrepreneurship, mechanisation and financial literacy. Training was provided to all interested farmers in the command areas of three sugar mills in the southern states of Karnataka and Telangana.

Findings and recommendations

This report presents the findings of the evaluation in the Sugarcane sector in two states in Southern India. Farmer data was collected by our Indian research partner and analysed in three years: 2016 (baseline), 2018 (midline) and 2021 (endline). A project document review and project staff interviews were used to explain and validate results.

The results show initial improvements in the adoption of good agricultural practices, including the use of improved irrigation practices, as well as improvements in productivity. For future projects we recommend, among others, to consider shocks and improve farmer resilience and to apply different interventions for different types of farmers. This includes interventions that focus on other sources of farm or non-farm income. Also, it is needed to engage farmers more strongly in the design of interventions. Another recommendation is to extract value from this evaluation by using data and sharing findings.