# BACKGROUND NOTES AND STATISTICS

## INTRODUCTION

Sugar is produced from either sugar cane (about two thirds of world production) or from sugar beet (about a third of world production). Sugar from cane is mainly grown in tropical zones and from beet in temperate and other zones. Sugar cane is a perennial crop from which number of successive harvests ("ratoons") can be taken, whereas sugar beet can be rotated with other crops. In its completely refined form the sugar from beet is indistinguishable from sugar from cane. Since India produces cane sugar, these notes focus on the cane sugar industry. However beet sugar production and trade - and in particular substantial exports of white refined sugar from the highly protected EU market - are major factors in the international environment of the industry.

We are interested in the incentives for sugar cane farmning resulting from the Indian trade regime and various other policies, but as cane is not traded internationally, it is necessary to work back to the incentives for farmers by first looking at how Indian trade and other policies affect sugar and molasses, the two internationally tradable joint products of sugar cane milling. Our approach to this is based on the study of incentives to sugar and sugar cane by Goldar and Gulati (1991) which was done as part of the original research project.

Nearly all the sugar produced and consumed in India _is plantation white (_ see below). Its production) involves five principal stages.2 These are:

- Extraction of the juice from the cane by crushing it between rotating, grooved rollers.

- Clarification or purification of the juice by chemical action.

- Evaporation ofjuice into massecuite, a thick syrup-like mass, by boiling the purified juice..

- Crystallization of the massecuite, as soon as critical temperature is reached.

- Separation of the molasses from the crystals of sugar.

The production of the white refined sugar predominantly consumed in developed countries involves another fairly expensive refining stage, which can be done separately in refineries typically sited near major markets, or added on to the basic milling and first refining stage.<sup>3</sup> The processing of cane to extract sugar produces two principal by-products: bagasse and molasses. The former is a residual from the extraction of the juice and the latter is the residual of the last step. The amount of bagasse produced depends on the fiber content of the sugarcane, usually about 90 percent by weight. It is used as fuel for boiling the juice, but mills produce more bagasse then they can consume. In India part of the surplus is supplied to paper mills for 'Cane sugar production started as early as 400 BC in the South Pacific area, but over time production has moved to other parts of the world. Beet sugar, in contrast, is relatively new. It started in Europe and became commercial in the 1830s. See James Fry( 1985) for a succinct non-technical description of sugar growing, milling and refining. 2As noted previously, Brazil is the largest producer of sugarcane if the cane reserved for ethanol production is counted. 3For specialized uses in certain industries -e.g. the pharmaceutical industry-sugar undergoes yet another refining stage.

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