Where to Put the Sugar Mill: Cane Freight versus Power Evacuation
A cooperative federation proposes a 5,000 tonne-cane-per-day (TCD) sugar mill. The district produces about 4.8 lakh tonnes of cane a year, of which 38% is crushed by 90 khandsari units and the rest is sent 140 km by road to mills in a neighbouring district. Cane loses 3–4% of its sucrose every 24 hours after cutting. Site X lies in the middle of the cane belt, 6 km from a metalled road but 22 km from a broad-gauge railhead; a 22 kV feeder passes 1.5 km away. Site Y is a 40 ha plot beside the railhead on the national highway, 34 km from the cane belt, with a 132 kV substation next door. The mill plans a 20 MW cogeneration plant burning bagasse (about 30% of cane weight at 50% moisture), and the state grid will buy power only above 15 MW. Land costs ₹9 lakh/ha at X and ₹26 lakh/ha at Y; the mill needs 40 ha. Freight is ₹4.20 per tonne-km by road and ₹1.60 per tonne-km by rail.
1. First check whether 5,000 TCD is a sensible size for this district, then compare the two sites on cane freight and land cost and state which you prefer, showing the arithmetic.
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Step 1 - Size check. A mill crushes for about 160 days. Cane available minus the 38% taken by khandsari = 4.8 × 0.62 ≈ 2.98 lakh tonnes. At 160 days that supports only about 1,850 TCD; a 5,000 TCD mill would need roughly 8 lakh tonnes and would run barely 60 days - too short a season to be viable, and it would have to fight the khandsari units for cane. Either scale the proposal to 2,500–3,000 TCD, or plan to displace khandsari and import cane from adjoining blocks. This is the first judgement; site choice comes after it.
Step 2 - Cane freight at 3,000 TCD (~4.8 lakh tonne-season). Extra distance at Y = 34 − 6 = 28 km. Extra cost = 28 × ₹4.20 = ₹117.60 per tonne of cane. Over 4.8 lakh tonnes that is about ₹5.6 crore every year.
Step 3 - Land cost. Difference = 40 ha × (₹26 − ₹9) lakh = ₹6.8 crore, once only.
Step 4 - Compare. The annual freight penalty at Y repays the entire land premium at X in about 15 months, and recurs every year. Sucrose loss over an extra 28 km of road is small in itself, but harvest-to-crush delay at the gate is the larger risk, and distance discourages farmers from supplying.
Provisional answer: Site X, subject to the power question in the next task.
2. Does the 20 MW cogeneration plan change your recommendation? Reason it through.
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The bagasse problem. Bagasse is about 30% of cane weight and holds 50% moisture - it is bulky, wet and low in calorific value per tonne. Transporting it 34 km to Site Y costs money and gains little, so the fuel itself argues for burning at the crush site, i.e. Site X. Cogeneration therefore strengthens the case for X.
The grid problem. This is where the plan can overturn the decision. A 22 kV feeder cannot evacuate 20 MW; 22 kV lines typically carry only a few megawatts, and the grid will buy power only above 15 MW, so the plant must run at high load factor to qualify. Site X would need a dedicated 132 kV line and substation, roughly ₹15–20 crore for 22 km plus bay costs. Site Y already has 132 kV at the boundary.
The comparison. Annual cane-freight saving at X is about ₹5.6 crore. Capitalised at 10% over 20 years, that is well over ₹50 crore - more than the cost of the 132 kV line. So X remains preferable if the state transmission utility will build or share the line and the mill can secure a long-term power purchase agreement. If the utility refuses and the mill must fund the line alone, or if the power purchase agreement is not assured, Y becomes defensible because the revenue from 20 MW (say 15 MW exported × 8,000 hours) dwarfs the freight penalty.
Judgement: recommend X conditional on a written commitment for 132 kV evacuation; otherwise Y, or a third site on the rail line inside the cane belt. The trap is to answer the freight arithmetic alone and ignore power.
3. Classify the activities in this proposal under primary, secondary, tertiary and quaternary sectors, and say whether the mill is a basic or a consumer-goods industry and why it is raw-material oriented.
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Classification.
- Primary: cane cultivation - direct extraction from the land.
- Secondary: cane crushing and sugar manufacture; khandsari (a cottage/household manufacturing unit); bagasse-based power generation, which is manufacturing/processing of a by-product.
- Tertiary: road and rail haulage of cane and sugar, the railhead, trade and mandi services, banking and the cooperative's sales network.
- Quaternary: cane-variety trials, sugar-recovery laboratories, quality control and the research that supports the mill - knowledge-based, not goods-handling.
Raw-material orientation. Cane is a weight-losing, perishable input. Roughly 100 tonnes of cane yield 10–11 tonnes of sugar, 3 tonnes of molasses and 30 tonnes of bagasse, so the material index is about 10; only about one-tenth of the original weight is finally shipped out. Sucrose also falls 3–4% a day after cutting. Both factors pull the plant to the field, not to the market - the classic case for a raw-material-oriented industry.
Basic or consumer? Sugar goes directly into household consumption and is therefore a consumer-goods industry, even though it also feeds bakeries and pharmaceutical firms; it is not 'basic' in the sense of iron and steel, which supply other industries. Note the contrast with khandsari, which has lower recovery but provides rural employment - the cooperative's displacement of khandsari is a real, arguable trade-off, and the usual answer is phased licensing plus a cane-development role for the mill.