Sugar Factory Closures Threaten North Andhra’s Agrarian Economy

Today, the president of Sankili Chakkera Parisrama Parirakshana Samithi submitted a memorandum to Vizianagaram Joint Collector S. Sedhu Madhavan urging protection of the Bhimasingi sugar factory, which may cease crushing from the next season. The plea underscores a wider crisis in Andhra Pradesh where three sugar mills have been idle for years, jeopardizing regional food‑processing capacity and livelihoods. The factory provides direct and indirect employment to thousands, and its closure would push total job losses from sugar‑sector shutdowns beyond 5,000.

•Three cooperative sugar mills in Vizianagaram, Parvatipuram and Srikakulam districts have shut down, and a fourth private unit signals a possible exit next season.
•The abrupt loss of crushing capacity has already slashed sugarcane cultivation from tens of thousands of acres to a fraction, jeopardising the livelihoods of thousands of farming families.

Three cooperative sugar mills in Vizianagaram, Parvatipuram and Srikakulam districts have shut down, and a fourth private unit signals a possible exit next season. The abrupt loss of crushing capacity has already slashed sugarcane cultivation from tens of thousands of acres to a fraction, jeopardising the livelihoods of thousands of farming families.

Scale of the Collapse

The Bhimasingi cooperative, set up in 1960, ceased operations in 2019 after decades of losses. Latchayyapeta’s cooperative, founded in 1995 and run by the NCS Group between 2002‑2020, stopped crushing five years ago. The Amadalavalasa mill, the oldest of the trio, was established in 1953 and closed in 2003.

▸Bhimasingi factory: 1960 – 2019
▸Latchayyapeta factory: 1995 – 2020 (crushing stopped)
▸Amadalavalasa factory: 1953 – 2003

The ripple effect is stark: sugarcane area in Vizianagaram fell from 35,000 acres to 3,500 acres, while Srikakulam’s cultivated area shrank from 50,000 acres to 5,000 acres.

▸Vizianagaram: 35,000 → 3,500 acres
▸Srikakulam: 50,000 → 5,000 acres

Policy Framework Governing Sugar Procurement and Rural Livelihoods

Under the Food Security Act 2013, the Union must procure cereals for the National Food Security Mission and the Public Distribution System. The Food Corporation of India (FCI) is the statutory agency that purchases, stores and distributes these grains, providing a price floor for farmers. Sugarcane, however, falls outside the Act’s direct procurement mandate, leaving growers dependent on private mills for market access and income stability.

▸FCI’s role: procure, store, distribute cereals for NFSM & PDS
▸Food Security Act 2013: obliges Union procurement of cereals
▸Sugarcane: excluded from statutory procurement, reliant on private mills

Without a guaranteed outlet, the closure of crushing units forces farmers to abandon sugarcane, eroding the agrarian value chain that once linked rural credit, ethanol production and allied industries.

Political and Institutional Responses

Local leaders have mobilised. Lok Satta Party State President Bhisetti Babji met MSME Minister Kondapalli Srinivas and Vizianagaram Collector S. Ramsundar Reddy, urging modernisation of the Bhimasingi plant. Simultaneously, the Sankili Chakkera Parisrama Parirakshana Samithi submitted a memorandum to Joint Collector S. Sedhu Madhavan, seeking government protection for the private factory that has been a lifeline for thousands.

▸Lok Satta Party met MSME minister & collector
▸Sankili committee lodged memorandum with joint collector
▸Private factory near Sankili may stop crushing next season

Beyond the sugar sector, the central government has released funds through the Kalyana Karnataka Region Development Board for the “Poushtika Raichur” nutrition scheme and via NITI Aayog for a ‘Shakti Kendra’ under the Aspirational Blocks Programme in Maski taluk, signalling a broader push to cushion rural distress.

Did You Know? The private sugar mill near Sankili has operated continuously for two decades, outlasting all three cooperative units in the region.

Macroeconomic and Supply‑Chain Implications

Sugarcane’s decline curtails not only raw sugar output but also ethanol and bio‑based by‑products that contribute to India’s renewable‑energy targets. The loss of crushing capacity translates into reduced rural cash flow, weakening demand for agricultural inputs and credit. Moreover, the shift to alternative crops may alter cropping patterns, potentially increasing water stress in a region already grappling with erratic monsoons.

▸Ethanol production linked to sugarcane crushing faces a shortfall
▸Rural credit demand expected to fall as cash income shrinks
▸Crop diversification may heighten irrigation pressure

If unaddressed, the factory closures could trigger a feedback loop: lower farmer incomes depress consumption, dampening rural demand, and further discouraging private investment in agro‑industries.

Way Forward

Reviving the defunct cooperatives requires capital infusion, technology upgrades for ethanol and bagasse utilisation, and integration with the statutory procurement system to guarantee a floor price. Public‑private partnerships, backed by targeted subsidies from schemes like the MSME initiative, could restore crushing capacity while aligning with the nation’s renewable‑energy goals. A coordinated policy response that bridges the gap between the Food Security Act 2013’s cereal focus and sugarcane’s market realities is essential to safeguard North Andhra’s agrarian economy.