The sugar industry in Maharashtra

Sugarcane and the sugar industry are an indisputable mainstay of Maharashtra’s rural economy. With few exceptions, this agribusiness is doomed to financial unsustainability. The causes and potential solutions to this impending crisis have been detailed here.

Maharashtra has witnessed an economic revolution in its rural areas through the pioneering efforts of Dhananjayrao Gadgil, Vithalrao Vikhe Patil, Vaikunthbhai Mehta (among others) and some well-known names in the private sector such as Walchand Group, Somaiyas and Dahanukars, in the establishment of the sugar cane industry in the last century. The sugar industry became the bridge between agriculture and industry in the state and ushered in rapid rural development. This multi-faceted industry has generated in its wake the development of rural infrastructure, annexes, cottage industries such as jaggery and khandsari (raw unrefined white sugar), education, health services, agricultural mechanization, dairy, ethanol and other chemicals, and power generation. As a result, the general standard of living in these regions has risen considerably.

At first, in the 1950s and 1960s, it was natural for the government to grant favorable status to cooperative sugar factories to energize the movement and the spirit of cooperation. However, continued state intervention and political influence, long after its inception, prevented a level playing field for all industry stakeholders. Regional interests may be the reason licenses have been granted. This is despite the fact that by allowing a higher density of plants with lower crushing capacities, economies of scale could never be realized in the production of major products or by-products. Moreover, the sanctioned factories had little correlation with the irrigation potential of the region. As a result, more than a fair share of the irrigation potential developed in the region has been diverted to the cultivation of sugar cane (Planning Commission 2007).

Rachel J. Bradford