For P. Srinivas Reddy, sugarcane is now just a memory. At 55, the farmer from Narayankhed in erstwhile Medak district of Telangana has adapted to the changing times, cultivating cotton and pulses on his 25-acre rainfed land. With groundwater depletion rendering irrigation impossible, he no longer battles the uncertainties that once came with sugarcane farming. But the shift wasn’t by choice; it was a necessity.
Two decades ago, sugarcane was his mainstay, grown on seven acres. Back then, Telangana’s sugar industry thrived, supporting over a dozen major mills and around 125 ‘khandsari’ units. At its heart was Nizam Sugars Limited (NSL), once the State’s second-largest PSU employer, with crushing units spread across the region. But as monsoons turned erratic in the early 1980s, groundwater reserves took a hit. The decline in sugar recovery rates — from 12% to 9% — pushed mills into losses. Rising labour costs, the lack of mechanisation and inconsistent government support further crippled the sector, forcing farmers like Reddy to look elsewhere.
Even NSL, once an industry giant, could not withstand the collapse. Its roots traced back to 1937 when Raja Dhanraj Giriji Narsing Giriji established Asia’s largest vacuum pan sugar factory near Bodhan (Shakkar Nagar). The Nizam’s government later took control of it through the Industrial Trust Fund, and after Hyderabad State merged with India in 1948, the factory continued operating. In 1958, two years after the formation of Andhra Pradesh, it became a State-run public sector undertaking (PSU).
Over the years, NSL expanded aggressively, adding seven units — one each in coastal Andhra and Rayalaseema, and the rest in Telangana — by 1976-77. At its peak, it was Telangana’s second-largest PSU employer after Allwyn, boasting three distilleries and a crushing capacity of nearly 38,000 TCD (tonnes crushed per day), supported by cane plantations spread over 1.62 lakh acres.
Yet today, all that remains of the once-flourishing sugarcane industry is a pale shadow of its former self. With improved irrigation facilities making other crops more viable, farmers switched to paddy, cotton, and maize — crops backed by MSP. As sugar mills shut down, the sweet crop that once symbolised prosperity turned into a bitter chapter in Telangana’s agricultural history.
Privatisation, promises, prolonged collapse
As sugar mills struggled, privatisation was seen as a possible lifeline. But instead of revival, it only accelerated NSL’s downfall.
As losses spiralled out of control, the then united Andhra Pradesh government decided to privatise seven NSL units, following the earlier sell-off of the Hindupur unit in Rayalaseema (1998) and Bobbili in coastal Andhra (2002). An implementation secretariat was set up to oversee the process.
“As no bids were received for Bodhan, Metpally and Medak (Mombojipally), the government opted for the ‘Swiss Challenge’ method and sold a 51% majority stake to Delta Paper Mills through an unsolicited bid,” explains NSL general manager K. Ramesh Babu. In November 2002, the joint venture — Nizam Deccan Sugars Ltd (NDSL) — was formed, absorbing these units along with two subsidiary distilleries, he adds.
But even this experiment couldn’t sustain itself. Mounting dues of farmers, financial mismanagement and operational inefficiencies led to its collapse by the 2015-16 crushing season. The Telangana Rashtra Samithi (now Bharat Rashtra Samithi), which had promised to revive the NSL units during its 2014 election campaign, including reclaiming the Kothur (Zaheerabad) unit, failed to deliver.
In 2016, the majority stakeholder in NDSL referred the company first to the Board for Industrial and Financial Reconstruction and later to the National Company Law Tribunal (NCLT), sealing its fate.
Three years later, in 2019, the NCLT issued orders for the liquidation process, but NSL challenged the decision at the national level, where the petition filed by the majority stakeholder was dismissed. Meanwhile, lending banks took the matter to the Debt Recovery Tribunal, which proposed a one-time settlement. A ₹298-crore debt was negotiated down to ₹190 crore, with NDSL agreeing to pay 10% of the amount to begin with.
However, when the Telangana government blocked NDSL’s attempt to sell land belonging to the Bodhan unit, the company refused to clear its dues. Ultimately, the State had to step in, repaying ₹175.26 crore, including interest, to four banks.
Revival plan
The revival of NSL remained a hot political issue, with the Congress making it a key pre-poll promise for the 2023 Telangana Assembly elections. In line with this, a committee comprising ministers, legislators and officials was formed to draft a revival plan.
“To start with, a consultancy firm has been tasked with charting out a roadmap for reviving the Bodhan unit, and its report is expected within a month,” Cane Commissioner G. Malsur informs.
As a preparatory step, the Industries department has already held three meetings with farmers to convince them to take to cane plantation again, assuring them of government support, he adds, emphasising that the government is fully committed to reviving NSL, with 100% budgetary backing as promised to the farming community.
For the proposed revival, the department has begun identifying farmers in villages around Bodhan with access to irrigation, aiming to educate them on the benefits of sustainable sugarcane farming. Officials are emphasising how the crop can ensure long-term soil health while also providing a stable and profitable income.
In the three awareness meetings that have been held so far, farmers expressed interest in returning to sugarcane,but on one condition: they want the government to offer substantial support, including subsidies, interest-free loans and other incentives to make sugarcane cultivation more rewarding than paddy.
“Agricultural scientists who participated in those meetings explained the long-term damage caused by continuously raising water-intensive crops such as paddy, particularly its impact on soil health,” points out Assistant Cane Commissioner S. Sreenivas, detailing the department’s efforts to bring farmers back to the crop.
He explains that, apart from subsidies, key demands of farmers include the availability of high-yielding cane varieties to boost average yields from 30-35 tonnes per acre to at least 40-45 tonnes per acre.
Further, he highlights the need for at least 15,000 acres of cane plantations in the surrounding areas to support the Bodhan unit, which has a crushing capacity of 3,500 TCD and operates for 130 days a year, producing at least 4.55 lakh tonnes of sugarcane. The Medak and Metpally units, each with a 2,500-TCD crushing capacity, would require another 3.25 lakh tonnes of cane production annually.
As of the 2024-25 crushing season, only seven sugar mills, all in the private sector, are operational in the State, with a combined crushing capacity of 24,700 TCD and cane plantations spread across 50,686 acres, according to Cane Department officials.
What farmers want
Officials say that most farmers who attended the awareness meetings demanded an additional ₹1,000 per tonne for sugarcane, along with subsidies on farm equipment, especially harvesters, arguing that the ₹500 per quintal bonus on paddy discourages sugarcane cultivation.
For the 2024-25 crushing season, the Centre has set the fair remunerative price (FRP) for sugarcane at ₹3,400 per tonne based on a basic recovery rate of 10.25%, with a premium of ₹33.2 per tonne for every 0.1% increase in recovery rate. For a 9.5% recovery rate, the FRP stands at ₹3,151 per tonne.
“We are not expecting anything for free, but we do seek the State government’s support in the form of a one-time subsidy for the purchase of harvesters and rotavators, interest-free crop loans, subsidised drip irrigation systems and seed cane,” says K. Buchi Reddy, a farmer of Chittapur in Jagtial district.
Another farmer, Purnachander Rao from Minarpally in Nizamabad district, says that a complete set of cane harvesting equipment, including a cane harvester along with two tractors (one fitted with a small crane to lift and load cane onto transport vehicles), would cost about ₹1.3 crore. Providing one such set to every cane-growing village could significantly ease the burden on farmers, he adds.
Currently, hired harvesters charge ₹670 per tonne for cane, while labourers demand ₹800 per tonne, and such equipment is not readily available locally.
Buchi Reddy explains that most farmers in his area receive ₹3,672 per tonne because their sugarcane has a high recovery rate of 11.2% and yields of 40 to 60 tonnes per acre, compared to the average 30 to 35 tonnes. The existing drip systems are not quite suitable for sugarcane, as they completely get damaged every three years, he adds and suggests that farmers would benefit more if the basic recovery rate is fixed at 9% and, instead of providing large subsidies to harvesters, sugar mills could be entrusted with the task of harvesting sugarcane.
Regardless of the government’s plans and the expectations of farmers, reviving NSL largely hinges on supportive measures to be recommended by the consultancy and ample budgetary support, at least in the initial years, to establish a stable foundation.
Published – February 21, 2025 08:18 am IST
