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MANAGEMENT DEVELOPMENT
INSTITUTE
MURSHIDABAD

A
Project Report on
Measuring Degree of Global
Competitiveness in
World Sugarcane Industry

Subject: Macroeconomics
Project Mentor: Dr. Paroma Mitra Mitra
Mukherjee
Submitted by: Amit Kumar
(15PGPM29)

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ABSTRACT
Globalization integrated the world into a borderless society and is a factor which made the
business and market come closer and made them to work together. But globalization also
brought competition amongst each other in this world. This competitiveness helps to enhance the
strengths and remove the weaknesses residing in the path of progress.
This article attempts to analyse and measure the degree of competitiveness among Sugar Cane
producing countries by using the formula 1-mi2 (Ray (2006)) where Mi is the market share of
individual Sugar Cane producing countries in respective years from 1 to i. Based on time series
data analysis this degree of competitiveness may help us to examine the past trend and future
perspective of an individual nation which can be helpful in designing and making strategies to
enhance from its present situation and with optimal use of its resources to excel against the
competitors. The Indian Sugar Cane industry scenario and its future prospects are also been
discussed along with top Sugar Cane producing countries.
The statistic shows the top ten sugar cane producers and the total global sugarcane production
from the year 2000 to 2013 (Table 1). In the year 2000, about 1,255,887,842 tons of sugar cane
was produced worldwide. Nowadays, the amount of produced sugar cane is much higher. The
world sugar cane production amounted to 1,911,179,775 tons in the year 2013 (FAOSTAT).

While going through the data pattern we came to know that Brazil and India consumes nearly
50% of the total sugarcane production market in the world and rest is been distributed among
china and other developing countries. United States stood far behind securing 10th rank in the
global sugarcane production index (Table 2).

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1. Introduction
Sugar is obtained in large scale from sugarcane plant. Sugarcane is one of the species of
perennial true grasses of the genus Saccharum produced in the warm temperature to tropical
regions. It is an old energy source for human beings and also a recent development shows it as a
replacement of fossil fuel for motor vehicles.
Sugarcane was first grown in Western India and south East Asia. Around 327 B.C. it was an
important crop in the Indian Sub-continent and later introduced to Egypt around 647 B.C. Since
then, the cultivation of sugarcane was extended to tropical and sub-tropical regions.
Approximately 80% of sugarcanes production is being used for sugar but now it is playing an
important role in solving challenges of modern world. Sugar Ethanol is an important an
important alternative for meeting energy demand of largest producers of Sugarcane in the world.
Sugarcane cultivation also reduces greenhouse gas emissions and keeps environment clean. In
recent innovation it is being used for value-added products such as bioelectricity and biohydrocarbons but most countries use it for as a source of sugar.
Sugarcane is mostly produced in tropical south and south East Asia. It is known that sugarcane
was first cropped in New Guienea around 6000BC. Some farmers and cultivators use it for sweet
cane juice. Some early farmers in Southeast Asian region boiled the cane juice down to a
viscous mass to facilitate transportation. But the earliest known production of crystalline sugar
began in northern India.
Production of cane sugar is a multi-step process which involves growing of the cane, harvesting
of the cane, extraction of the cane juice, evaporation and boiling to get the final product as cane
sugar.
Growing of the cane: Sugar cane needs a lot of water but the problem of waterlogging is
something which is to be taken care of. Sugar cane takes around 12 months of time to reach

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maturity although the time varies widely around the world (from six months to 24 months). The
difference is because it re-grows from its roots so as plants last many cycles.
Harvesting: Sugarcane is harvested by cutting down the stems but leaving its roots so that it will
re-grow in time for the next season. It takes around 3 months to 12 months for the plants to regrow. Then the cane is transported to the factory by trucks or by rail wagons.
Extraction: This is the first stage of processing of the cane juice from the sugarcane where the
cane is crushed down using huge rollers and the sweet cane juice gets extracted. The residue
cane fibres also called ad bagasse is used taken for the use in boilers for bio-electricity
generation.
Evaporation: In this process the juice is cleaned up with the use of slaked lime and once it is
done, the juice is thickened up into syrup using evaporation process.
Boiling: This is the last stage of sugar processing where the syrup is placed into a very large for
boiling where with the help of workers and machinery rigorous processes are done to initiate
sugar crystal formation. Once the crystals have grown it is then given a final dry with hot air to
make it ready to be stored and despatch.
The Global Competitiveness Index (GCI) measures the competitive performance of the
economies around the world for doing business. It is a composite index that combines three
component indices covering 12 different parameters (termed pillars). The details of the three
components along with the weights assigned to them and the pillars are presented in table below:
Basic requirements: Weight for India (60%)

Institutions

Infrastructure

Macroeconomic environment

Health and primary education

Efficiency enhancers: Weight for India (35%)

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Higher education and training

Goods market efficiency

Labour market efficiency

Financial market development

Technological readiness

Market size

Innovation and sophistication factors: Weight for India (5%)

Business sophistication

Innovation

1.1 Global Sugar cane Production scenario:

World sugar cane production is depicting a rising trend during recent decade apart from
slowdown in a year or two and is expected that south central 2015/2016 sugar cane harvest
would reach 590 million tons of processed cane (UNICA). World sugar cane consumption is
projected around 173 million with an increase in global export to 52 million tons
(FAS.USDA.GOV).Sugar cane growing countries of the world are lying between latitude 36.7
degree north and 31.0 degree south of the equator extending from tropical regions to subtropical
regions. In 2012 Food and Agriculture Organization estimated that sugar cane was cultivated on
about 26.0 million hectares of land in around 90 countries where the world wide harvest was
around 1.83 billion tons (wikipedia.org). In the year 2013, Brazil was the largest producer of
sugarcane in the world with the production of around 768,090,444 tons of production that fiscal
year. The next five major producers in the world, in decreasing amount of production were India,
China, Thailand, Pakistan and Mexico (Table 1).
1.2 India Sugar cane production scenario:
India is worlds largest sugar consuming country with 15 % of global consumption. Sugar in

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India is a swing producer due to severe year to year fluctuations in its production which affects
its trade status. India is second largest sugar cane producer in the world and due to its
fluctuations in production affects the global market price of sugar. The Indian sugar industry is
the largest agro industry after cotton. With around 50 million sugar cane farmers and a large
number of agricultural labourers involved in over 600 operating mills across India for cultivation
and production activities, the sugar cane industry resides as a potent rural economy driver in
India.

2. The Objective of the study

The global picture of the sugar cane industry can help us in knowing the Indian sugar cane
industry with respect to its competitors. This article is intended to measure the degree of global
competitiveness among the sugar cane producing countries from the year 2000 to the year 2013
and to analyze Indian sugarcane industry performance on global platform.

3. Methodology of the study

The methodology adopted for the intended study is broadly divided in to headings like data
sources, data type, period of the study and technique used for analysis.

3.1 Data Source

Source used for data acquisition is FAOSTAT (Food and Agriculture Organization Corporate
Statistical Database).

3.2 Data Type

The research is based on secondary data which is used for analysis of global competitiveness
among the top sugar cane producing countries of the world.

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3.3 Techniques used for Analysis

The analysis is distributed into statistical analysis and descriptive analysis.
The statistical analysis is used to find the trend in degree of competition among the global
competitors in the production of sugar cane. The corresponding hypothesis follows the null
hypothesis H0 that there is no increase in global competition among the sugar cane producing
countries against the alternative hypothesis H1 that there is increase or decrease in the global
competition.
Data is taken from the year 2000 to the year 2013 of top ten countries. They are India, Brazil,
China, Thailand, Pakistan, Mexico, Colombia, Indonesia, Philippines and United States. To find
the global competiveness we have calculated market share of top ten countries each year from
2000 to 2013. Then the formula for degree of competition 1-Mi2 is applied where Mi is the
market share of respective countries in the global sugar cane production. Next calculation is of
square of these individual market shares for a particular year and then Mi2 is calculated for each
respective year is calculated. Then, the value of 1-Mi2 is calculated to obtain the degree of
completion for all the years. In the last step trend line is drawn by taking the competitiveness
index of each year.

4. Descriptive Analysis

Brazil: The production of sugar cane in Brazil shows evergreen increasing trend except
for the year 2012 where it has decreased but again pushed into rising trend. The
production has increased from 327,704,992 tons in the year 2002 to 768,090,444 tons in
the year 2013. Also the market share has increase from 0.261 in the year 2000 to 0.402 in

the year 2013.

India: The production sees a roller-coaster ride whereby the production has increased

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from 299,323,900 tons in the year 2000 to 341,200,000 tons in the year 2013. But the
market share has decreased from 0.238 in the year 2000 to 0.179 in the year 2013.

China: The production has increased from 69,298,730 tons in the year 2000 to
128,850,908 tons in the year 2013. Also, the market share has increased from 0.055 in the
year 2000 to 0.067 in the year 2013.

Thailand: The production has increased from 54,052,125 tons in the year 2000 to
100,096,000 tons in the year 2013. Also, the market share has increased from 0.043 in the
year 2000 to 0.052 in the year 2013.

Pakistan: The production has increased from 46,332,600 tons in the year 2000 to
63,749,900 tons in the year 2013. But the market share has decreased from 0.037 in the
year 2000 to 0.033 in the year 2013.

Mexico: The production has increased from 44,100,000 tons in the year 2000 to
61,182,077 tons in the year 2013. But the market share has decreased from 0.035 in the
year 2000 to 0.032 in the year 2013.

Colombia: The production has increased from 33,959,251 tons in the year 2000 tons
34,876,332 tons in the year 2013. But the market share has decreased from 0.027 in the
year 2000 to 0.018 in the year 2013.

Indonesia: The production has increased from 23,900,000 tons in the year 2000 to
33,700,000 tons in the year 2013 while the market share shows a slight decrease from
0.019 in the year 2000 to 0.018 in the year 2013.

Philippines: The production has increased from 24,491,000 tons in the year 2000 to
31,874,000 tons in the year 2013 while the market share shows a decrease from 0.020 in
the year 2000 to 0.017 in the year 2013.

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United States: The production has increased from 36,114,000 tons in the year 2000 to
27,905,943 tons in the year 2013 and the market share also decreased from 0.029 in the
year 2000 to 0.015 in the year 2013.

Country/
Year
BRAZIL
INDIA

200
0

01

02

03

04

05

06

07

08

09

10

11

12

13

32.7

34.
5
29.
5

36.
4
29.
7

39.
6
28.
7

41.
5
23.
3

42.
2
23.
7

47.
7
28.
1

54.
9
35.
5

64.
5
34.
8

69.
1
28.
5

71.7

73.4

29.2

34.2

72.
1
36.
1

76.
8
34.
1

29.9

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CHINA

6.9

7.7

9.2

9.2

9.1

8.7

9.3

12.
4
7.3

11.
6
6.6

11.1

11.5

4.7

11.
3
6.4

THAILAN
D

5.4

4.9

6.0

7.4

6.4

4.9

PAKISTAN

4.6

4.3

4.8

5.2

5.3

MEXICO

4.4

4.7

4.5

4.7

COLOMBI
A

3.3

3.3

3.7

INDONESI
A

2.3

2.5

PHILLIPIN
ES

2.4

US
Total

6.8

4.7

4.4

5.4

6.3

5.0

4.8

5.1

5.0

5.2

5.1

3.9

4.0

3.9

3.7

3.5

2.5

2.4

2.6

2.9

2.9

2.7

2.7

3.1

3.3

3.1

3.6

3.4

3.5

3.3

2.9

95.9

98.
0
28.
3
126
.3

103
.3
29.
9
133
.3

107
.8
30.
0
137
.8

200
0

01

02

32.7

29.6
Others
WORLD

Country/
Year
BRAZIL

125.
5

9.5

12.
4
9.8

12.
8
10.
0

4.9

5.5

5.8

6.3

4.9

5.0

4.9

5.0

6.1

3.2

3.6

3.3

3.4

3.3

3.4

2.5

2.5

2.6

2.6

2.4

2.8

3.3

3.1

3.2

3.4

3.2

2.8

3.0

3.2

3.1

2.6

2.9

2.7

2.5

2.7

2.4

2.6

2.9

2.7

100
.8
33.
3
134
.2

102
.3
29.
2
131
.5

112
.2
29.
7
141
.9

128
.2
33.
2
161
.4

142
.3
30.
4
172
.8

138
.2
30.
4
168
.7

140.
2
29.0

150.
8
29.2

169.
3

180.
0

153
.7
30.
1
183
.3

156
.3
34.
7
191
.1

03

04

05

06

07

08

09

10

11

12

13

36.
4
29.
7
9.2

39.
6
28.
7
9.2

41.
5
23.
3
9.1

42.
2
23.
7
8.7

47.
7
28.
1
9.3

64.
5
34.
8
12.
4
7.3

69.
1
28.
5
11.
6
6.6

71.7

73.4

29.2

34.2

11.1

11.5

6.8

9.5

72.
1
36.
1
12.
4
9.8

76.
8
34.
1
12.
8
10.
0

INDIA

29.9

CHINA

6.9

34.
5
29.
5
7.7

THAILAN
D

5.4

4.9

6.0

7.4

6.4

4.9

4.7

54.
9
35.
5
11.
3
6.4

PAKISTAN

4.6

4.3

4.8

5.2

5.3

4.7

4.4

5.4

6.3

5.0

4.9

5.5

5.8

6.3

MEXICO

4.4

4.7

4.5

4.7

4.8

5.1

5.0

5.2

5.1

4.9

5.0

4.9

5.0

6.1

COLOMBI
A

3.3

3.3

3.7

3.9

4.0

3.9

3.7

3.5

3.2

3.6

3.3

3.4

3.3

3.4

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INDONESI
A

2.3

2.5

2.5

2.4

2.6

2.9

2.9

2.5

2.5

2.6

2.6

2.4

2.8

3.3

PHILLIPIN
ES

2.4

2.7

2.7

3.1

3.3

3.1

3.1

3.2

3.4

3.2

2.8

3.0

3.2

3.1

US

3.6

3.4

3.5

3.3

2.9

2.6

2.9

2.7

2.5

2.7

2.4

2.6

2.9

2.7

Total

95.9

98.
0
28.
3
126
.3

103
.3
29.
9
133
.3

107
.8
30.
0
137
.8

100
.8
33.
3
134
.2

102
.3
29.
2
131
.5

112
.2
29.
7
141
.9

128
.2
33.
2
161
.4

142
.3
30.
4
172
.8

138
.2
30.
4
168
.7

140.
2
29.0

150.
8
29.2

169.
3

180.
0

153
.7
30.
1
183
.3

156
.3
34.
7
191
.1

29.6
Others
WORLD

125.
5

Table 1: Production of Sugar Cane from Year 2000 to 2013 Unit in MMT
Source: FAOSTAT

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Table 2:- The Market share of top 10 Sugarcane producing countries

Source: Table 1

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Table 3: Square of Market share

Source: Table 2

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Year

Degree of Global Competitiveness

of Sugar Cane production
(1-Mi2)

2000

0.152587

2001

0.138668

2002

0.141732

2003

0.134186

2004

0.161544

2005

0.133093

2006

0.113035

2007

0.10258

2008

0.067824

2009

0.063254

2010

0.049225

2011

0.044351

2012

0.050387

2013

0.065489
Table 4: The Degree of Global Competitiveness (1-Mi2), In the Global
Sugar cane
Production from Year 2002 To 2011
Source: Table 3

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The global degree competitiveness is plotted in the form of graph below:

Figure 1: Graph for degree of global competitiveness with the trend line.
5. Statistical Analysis
The original time series data set on global sugar cane production is been used to study the time
series analysis from the year 2000 to the year 2011. In Table 2 Mi2 has been calculated where I
varies for respective years from year 2000 to the year 2013. To examine the trend in global
competitiveness among the Sugar cane producing countries and to detect if there any change
exists in the degree of global competiveness in Sugar cane production (1-Mi2) over the
years can

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be observed from the Figure 1.

In the Figure 3, linear regression analysis is been done considering the hypothesis

Ho as null hypothesis
that there is no change degree of global competitiveness in global Sugar Cane
production over the years
against hypothesis H1 as alternate hypothesis that there is change in degree of
global competiveness
over the years.
Let the linear equation for global competiveness of Sugar Cane producing countries
is

Gt = a + bt +

t ,

Where, Gt = Global competitiveness during the period t,

a & b = Regression parameters,
t = Time variable,
t = Error term.

Using the least square method to estimate a and b by time series data from Table 4,
the corresponding
analysis is presented as

R Square
.904

Adjusted R Square
.818

Std. Error of the Estimate

.802

.210

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The independent variable is year.

Table 5: Model Summary

Sum of Squares
Regression

Mean Square

2.368

2.368

.529

12

.044

2.896

13

Residual
Total

df

Sig.

53.756

.000

The independent variable is year.

Table 6: ANOVA

Standardized
Unstandardized Coefficients
B
Year
(Constant)

Coefficients

Std. Error

Beta

-.102

.014

202.305

27.918

t
-.904

The dependent variable is ln(GCI).

Table 7: Coefficients
The estimated value of a & b are 202.305 and -0.102 respectively.
Therefore the regression line observed is given by

Gt = 202.305 - 0.102t +

Sig.
-7.332

.000

7.246

.000

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To examine significance of b value (the regression coefficient of the linear curve), we test the
null hypothesis Ho: b=0 against the alternative hypothesis that H1: b>0 or H1: b<0.The observed
value of t is -7.332, with tail probability of 0.000, which is less than 0.05. Hence the null
hypothesis at 5% level of significance is rejected i.e. the degree of global competitiveness of
world Sugar cane production is decreasing with respect to time as the coefficient of time is
negative. The multiple correlate i.e. r value is 0.904 which is also high. The corresponding
ANOVA table provides f ratio as 53.756 for which the upper tail probability is 0.000 and is less
than 0.05 i.e. 5% level of significance.
So, it can be concluded that, the linearly decreasing trend equation is good fit for the problem.

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6. Conclusion
Thus, finally it can be concluded that the global competitions of Sugar Cane production is
decreasing over the years as well as the market share of Indian Sugar Cane industry is also
decreasing which is clearly not a good sign for Indian industry.
It is clear that developing countries like Brazil and India are the largest sugar cane producer in
the world. It is not because of the technology which is been used by these countries but mainly
because of the availability of low cost labour as well as low cost land available for cultivation
and production of sugarcane. Also liberalized government policies for agriculture sector make it
more lucrative and attractive to the farmers of sugarcane.
Among the top 10 Sugar cane producing countries, the market share of Brazil and China has
increased when compared to other countries. As, the degree of competition is decreasing over the
years and decrease in market share , china along with other countries impose a threat to Indian
Sugar Cane industry. It is now the responsibility of the government to take effective steps to
boost the productivity.

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7. References
1. http://www.sugarcanecrops.com/introduction/
2. http://apps.fas.usda.gov/psdonline/psdDownload.aspx
3. https://www.google.com/search?sourceid=chrome-psyapi2&ion=1&espv=2&ie=UTF8&q=linear%20trnd%20of%20global%20competiveness%20equation&oq=linear%20trnd%20of
%20global%20competiveness%20equation&aqs=chrome..69i57.16233j1j7
4. http://www.factfish.com/statistic-country/world/sugar%20cane%2C%20production
%20quantity

5.https://www.google.co.in/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0ahUKEwj29qv74YbLAhVBjJQKHfrEAe4
QFggrMAI&url=http%3A%2F%2Ffpts.com.vn%2FFileStore2%2FFile
%2F2014%2F07%2F03%2FSugar%2520industry
%2520report.pdf&usg=AFQjCNH5NeROrVlni3O8qryIin8cxfcf8Q&sig2=miLu3mL6iFHGavQs
Mefw2A
6.https://www.google.co.in/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwj29qv74YbLAhVBjJQKHfrEAe4
QFgglMAE&url=https%3A%2F%2Fapps.fas.usda.gov%2Fpsdonline%2Fcirculars
%2Fsugar.pdf&usg=AFQjCNHqxEigdAz4U55VLGs6MiKo2PPjTw&sig2=jOT28VC0jN3HVq2mklrKw

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