Financial Requirements, Credit Utilisation, and Factory-Level Issues in Sugarcane Farming: An Analytical Study of Farmer Challenges

Abstract

Sugarcane cultivation is one of the most economically significant yet capital-intensive agricultural activities in India. Farmers engaged in sugarcane farming face multidimensional challenges linked to financial requirements, credit utilisation, and structural constraints imposed by sugar factories. The present study examines the interconnected nature of these challenges with a focus on the financial burden of input-intensive farming, dependence on credit institutions, and factory-level issues such as delayed payments, supply-chain inefficiencies, and procurement policies. The research adopts an analytical framework integrating primary observations, secondary data, and conceptual economic models. The study finds that financial requirements for sugarcane farming have increased sharply due to rising labour costs, expanding irrigation needs, mechanisation, and higher fertilizer prices. As a result, farmers rely heavily on institutional credit from banks, cooperatives, and sugar factories. However, the utilisation of credit is often suboptimal due to non-agricultural diversions, high-interest rates from informal sources, and crop-cycle mismanagement. Factory-level issues further aggravate these challenges. Delayed payment of Fair and Remunerative Price (FRP), harvesting and transportation bottlenecks, inadequate communication systems, and factory indebtedness create financial stress for cultivators who depend on timely cash flows for reinvestment. The study also highlights significant differences between small, marginal, and large farmers in terms of access to credit, production efficiency, and resilience. Cooperative sugar factories, though foundational to the regional economy, struggle with cash liquidity, policy uncertainty, and fluctuating sugar prices. These problems directly impact farmers’ financial planning. Findings indicate that sustainable solutions must focus on improved credit delivery mechanisms, timely factory payments, enhanced technological support, mechanisation of harvesting, and financial literacy among farmers. The study contributes to the existing literature by offering an integrated analysis of farm-level economics and factory-level constraints, providing policy insights to strengthen sugarcane farming systems in India.