sugar industry supply chain

8/12/2019 Sugar Industry Supply Chain

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Supply chain system of sugar

industry


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The top ten sugar producers account for 77% of global production which was 169 million

tons in 2007/08.The figure No.3 is self-explanatory and offers ample scope for reducing the

cost of sugar production in India as compared to South African countries and Brazil. [19]

Indian Sugar Scenario:

In India, sugar industry is the second largest agro processing industry after textiles and

mainly located in the rural areas. In this industry, mainly farmers and labours are highly

involved in various activities like harvesting, cultivating, loading-unloading of canes and

ancillary. This industry provides huge employment opportunities to skilled, semiskilled

workers, and others of rural regions. Indian sugar industry contributes almost Rs. 22.5 billion

to the state and central government in form of tax and excise duties per year. In fact, this

industry generates electricity for its factory work but export surplus of power to the grid. In

India, the total number of registered sugar mills is 819 and number of factories running in

operation is 778 as on March 2006. The maximum numbers of sugar mills are found in Uttar

Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh. In India, Uttar

Pradesh and Maharashtra are the largest state in India where the sugar mills of government,

private and public sectors are spread all over the regions of the state. India has around 45

million farmers growing sugarcane, 600 sugar factories producing about 20 MT of sugar for

1.21 billion consumers as per year 2008-09. These figures make India largest consumer of the

sugar in the world as per USDA foreign Agricultural Service and it also explains Indias

fifteenth position in sugar exporting nations list. In March 2009, the sugar consumption was22.5 million tonnes from the total supply of sugar was 35557.86 thousand tonnes which is the

highest during the last ten years. According to the USDA Foreign Agricultural Service, sugar

production will increase by 27 per cent with an aggregate volume of 24.7 million tonnes of

sugarcane production-Indias marketing year (MY) 2010/11 (October-September). The total

sugar exported from India was 3331997 tonnes (worth Rs 444874.3 lakh) and the total import

in India was 386095 tonnes (worth Rs 58310.86 lakh) in March 2009. Due to the large

domestic consumption of sugar in the country, the export figures have not been significant.


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Supply chain system of sugar industry


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Inbound LogisticsThe farmers perform various farming activities like harvesting, cultivating, irrigating and

ploughing in the production of cane and then transport to the mills. There are various

government agencies have opened call centres for supporting farmers in sugarcane

production. Mostly sugar mills also help farmers in their farming activities by providing high

yield seeds, fertilizers, pesticides, knowledge, and other relevant nutrients. But sometimes,

farmers buy their seeds from the market. The cane societies are also highly involved insupporting the farmers in their field work.

Cane Management

In India Almost all sugar mills depend for their supplies of sugar cane on large number (5000

to 25000) of independent farmers. The sugar cane harvest is a complex logistical operation

that involves the cutting and loading of cane in the fields, the transportation to the factories

and the unloading of the cane in the factory. Each sugar factory has a number of teams, which

cut cane with hand (Manual harvesting) in order to meet a daily quota. Sugarcane cutting is a

hard and dirty job, but provides employment to people in nearby areas where jobs are scarce.

Sugarcane is cut at about ground level, the top green leaves are chopped off and then the stalk

is bundled. Once a complete bundle has been assembled, it is removed from the field with the

help of labourers and transferred to a larger vehicle for transport to the mill. Then, depending

on the quota for a particular day, resources such as Bullock Cart, tractors and trucks are

assigned. The harvested sugar cane should be crushed within 8-12 hrs. to get a good recovery

of sugar.


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Operations in the sugar millsThe sugar mills produce sugar from cane in four stages such as receiving of cane from

farmers, crushing the cane, processing for sugar production, and finally packing of sugar

according to their sizes i.e. Small,Medium and Large.

Detailed Process:The processing of sugarcane takes place with the help of heavily equipped machinery

assembled in the sugar mills. At the initial stage of the process, the sugarcane is lifted with

the help of crane under the supervision of supervisors or millers. The lias, cutter, chopper,

and hybridizers are inbuilt under this crane. After this, the sugarcane passes through the

milling and then sent to the boilers. In boiler, the sugarcane burns around 51 to 50 Motions

bagasse or dry dusty pulp. Some of the bagasse burns in the boiler as per required by the

sugar mills for using such. The remaining or extra amount of bagasse will go further in the

mill process. This extra bagasse can be purchased by the paper plant and power plant as peruse by their requirement. Therefore, the juice is extracted which further needs heating.

Hence, for heating the juice, the amount of steam is required around 160 to 165tonnes per

project or plant. The steam is produced with the help of boilers and turbines. For producing

the extra amount of steam, the boosting is required with the help of turbines. This whole

process cannot be operated or run without electricity. Generally, every sugar mills must need

electricity to run the fitted machines for extracting sugarcane to juice and juice to sugar in the

sugar mills. Therefore, sugar mills have their own power plant from which they generates

around 22 MW electricity on crushing the sugarcane. Now, after heating the juice, the dirt

from the juice gets removed. This is the cleaning process at the primary stage where the

cleaned juice and mud will get separated. Further, the cleaned juice proceeds to the

evaporation section which removes water from it. Hence, after removing the water from thecleaned juice, the millers dilute sulphur to it and then bleaching process takes place. After


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cleaning process, the cleaned juice will goes further to pine station for developing grains(Cheeni).Now, these grains pass through the centrifuges machine to separate the pure sugar

and molasses. Therefore, pure sugar goes to sugar weighing machines for sealing the sugar

into 50 to 100 Kg per jute bags. The sugar bags will be sent finally to the godowns of sugar

mills for storage purpose. During the processing, around 30% of molasses are produced and

the storage stand is used to store the molasses in the mills. The government releases the order

for selling the sugar and molasses in the market. The molasses have around 20 to 30 by-

products namely shampoo, toffees, medicines, alcohols, chemicals, etc.

By-products and sustainable inputs to industries

1) Sugarcane as a raw material used for processing in the sugar mills to produce sugar and

other by-products.

2) Sugar is the main product which is obtained from the sugar industry and is distributed in

the market.

3) Bagasse as a by-product obtained during mill processing and used for generating steam

and power plant projects. This by-product is easily consumable by the brick industry as a fuel

and used in making papers in paper mills. This helps farmers and cane society to feed theircattle.

4) Mud as a by-product also obtained during mill processing and used for soil conditioner,

manure, and valuable source of nutrients. This helps farmers to provide proper nutrition to

their crops.

5)Molasses as a by-product obtained during mill processing and used in distillery for making

alcohols, acids, industrial chemicals, etc.

6)Power is generated from bagasse during the mill processing which is used in the boiler to

generate steam and sold out to the state electricity boards.

7) Ethanol is produced from molasses during the mill processing. This alcohol is well

purified again to form fuel grade ethanol which can be mixed with the petrol. This purified

ethanol is used in vehicles, airlines, etc.8)Bio-fertilizers are obtained from the mixture of the residue product during mill processing

operation with the chemicals.

Bagasse - a light-weight and highly inflammable commoditySugarcane crushing leads to a fibrous residue called bagasse. Dried bagasse is a highly

inflammable commodity and is also very light in weight. Therefore, it is watered to prevent it

from catching fire as well as being scattered. It is stored in the form of piles/ stacks, and used

whenever required in the sugar complex.

Bagasse


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The fibrous residue of sugarcane, after it is crushed in a sugar mill, is called bagasse. Theresidue contains 40-50 per cent moisture. Dried bagasse contains 70-75 per cent cellulose and

about 20 per cent lignin, which makes is highly inflammable. It is also light in weight and can

get easily scattered by the wind.

Bagasse can be stored for 8-10 months. It is usually stored in the form of:

Huge piles, which are watered to prevent scattering

Stacks of rope-tied bales

Bagasse storage area along with a sugar complex

When bagasse needs to be burnt to generate heat inside a power plant's boiler, it is dried toremove water and moisture before being transported to the sugar complex.

Electricity Act 2003 : bagasse-based power generation

Prior to 2003, domestic sugar mills used bagasse primarily to generate power for their captive

use. The surplus bagasse was sold as companies having captive power plants were not

allowed to sell surplus power. Electricity Act 2003 permitted sale of power by captive plants

either to SEBs or through open access thus changing the landscape for captive power users in

the country. The sugar industry also witnessed a surge in bagasse based co-generation

capacity post 2003 resulting in increase in generation of bagasse based power.

Prior to 2003, companies having captive power plants in India were not allowed to generate

and sell surplus power. Consequently, the sugar industry utilised bagasse only to the extent

required for generating power to meet captive use. The surplus bagasse was sold to other user

industries. The processes to generate power were also inefficient resulting in lower plant load

factors (PLFs) and plants operated for a shorter duration.

Electricity Act 2003 permitted captive power plants to generate and sell the surplus power

generated to the state electricity boards (SEBs) or merchant power through open access.


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Consequently, there was a spurt in bagasse-based co-generation capacity, as a number of

sugar mills added new capacities as well replaced older capacities for better technology.

Trend in surplus bagasse based power generation capacities in key sugar states (MW)

On an average, bagasse would account for 70-75 per cent of the above capacities, across the

years.

All major sugar producing states witnessed healthy capacity additions in bagasse-based

power generation over the last few years. CRISIL Research's sample set of 30 sugar

companies, spread across the country, added close to 1,200 MW of capacities from 2005-06

till 2010-11.

The surplus power generated by sugar mills is mainly sold to SEBs through power purchase

agreements (PPAs). Sugar companies refrain from selling power on merchant basis as selling

through open access poses risks such as penalties in case of lower power supply (which can

occur during times of low sugarcane production).

Cost of power generation cheapest through bagasse

Power generation through bagasse is the cheapest among all major energy sources in India.However, the potential power generation remains low at 9-11 GW. Ministry of New and

Renewable Energy projects capacity additions to the tune of 1.35 GW over the next 5 years.

It is believed that the pace would be faster and around 1 GW of capacities would be added

over the next 2 years entailing investments of Rs 50 billion.

The cost of power generation through bagasse is the cheapest among all energy sources in the

country at Rs 1.1-1.3 per unit. This excludes the opportunity cost - calculated as net of

revenues from selling entire bagasse produced, and purchase of power for running the

integrated sugar complex. If the opportunity cost is included, the cost of generation would

range between Rs 2.4-2.6 per unit.


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Cost of power generation via various energy sources


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Outbound Logistics and Distribution

The sugars that is stored in their mill godowns is then distributed to the wholesalers as

ordered by brokers or private agents. The wholesalers store the ordered sugar for further

distribution to their area retailers and finally to the consumers. Mostly consumers (indirect

customer) like levy (PDS- Public Distribution System and BPL-Below Poverty Line),military, institutional customers (airlines, shopping malls, railways, food companies, etc), and

other countries order sugar directly from the mills and/ or wholesalers. Near about 60%

indirect customers order sugar directly from wholesalers.


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References

1. Green Supply Chain Management: A Case of Sugar Industry in India Rupesh

Kumar, Vishnu Nath, Dr. Rajat Agarwal, Dr. Vinay Sharma.

2. Inbound Supply Chain Methodology of Indian Sugar Industry R.S.Deshmukh,

N.N.Bhostekar, U.V.Aswalekar, V.B.Sawant.

3.

www.crisilresearch.com

sugar industry supply chain

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