Sugarcane is the main commercial crop particularly in Western Uttar Pradesh. About 70% of India's sugar comes from Uttar Pradesh. Sugarcane is the most important cash crop as the state is country’s largest producer of Sugar. As per the report generated by Indian Sugar Mills Association (ISMA), total sugarcane production in India was estimated to be 28.3 million tonnes in the fiscal ending September 2015 which includes 10.47 million tonnes from Maharashtra and 7.35 million tonnes from Uttar Pradesh.

Major Challenges facing the Sugar Industry 

• India has the largest area under sugar cane cultivation in the world but the yield per hectare is extremely low and is even lower in North India than in South India
• The sugar industry has a seasonal character and the crushing season normally varies between 4 and 7 months in a year leaving the mill and the workers idle for almost half of the year.
• Average rate of sugar recovery from the sugar cane is less than 10 % which is much lower than other sugar producing areas like Java, Hawaii and Australia, up to 14 %.
• Most of the sugar mills in our country are of more old, have small size and outdated machinery with a crushing capacity of about 1200 tons per day.
• The cost of sugar production in India is one of the highest in the world mainly due to high sugar cane cost, uneconomic production process, inefficient technology and high taxes exercised by the state and the central governments.
• The industry faces problems in disposing by-products i.e. bagasse and molasses, especially under pollution control devices.
• The government policy, based on dual price system, discourages the entrepreneurs to make investment for further growth and improvement.
• The per capita annual consumption of sugar is about 10 kg in India, whereas it is about 20 kg in the world.

Suggestion

• Government has already taken following measures to arrest the downslide in sugar prices and to ameliorate the liquidity position of sugar mills:
o Increased import duty on sugar from 50 to 100 %
o Imposition of stock holding limits on sugar mills for two months
o Fixing of Minimum Indicative Export Quotas (MIEQ) and
o Removal of customs duty on export of sugar to find a way for surplus output in the overseas markets.
• C. Rangarajan Committee (2012) on sugarcane pricing had recommended abolition of SAP and favoured revenue sharing formula (RSF) for cane price payments, 75 % of sugar value or 70 % of the value of sugar and its byproducts should be disbursed to farmers towards sugarcane price.
• CACP has also recommended a hybrid approach with simultaneous implementation of Revenue sharing formula, FRP of Sugar and Sugar Price Stabilization fund.
• Better pricing, predictability and augmentation of storage facilities under Ethanol Blended Petrol programme to incentivise its procurement by OMCs.
• Power generation using cogeneration technology is another option through which companies can generate revenues by selling extra electricity generated as a by-product of sugar production to power distribution companies.
• Government should also incentivise crop diversification towards other less water intensive crops to reduce the problem of excess groundwater extraction from crops like sugarcane.

Boosting Sugar industry can help to propel state's economy while granting jos to large population.