Historic Indian sugar producer has improved production, farm management and safety at its Bonsucro Certified sugar mill
In May of 2015, the Indian sugar producer E.I.D Parry (India) Ltd became the first company in Asia to get a sugar mill certified under the Bonsucro Production Standard – a global, metric-based standard for improving the social, environmental and economic sustainability of sugarcane farming and sugarcane derived products. It was also the first company in the world that sources its sugarcane from smallholder farmers to earn the Bonsucro Certified mark.
The company has documented varied benefits of implementing the standard at its Pugalur Mill, which convinced management to work toward getting more of E.I.D. Parry’s nine sugar mills certified.
“The awareness of sustainability has grown. Now everyone talks about it. Every manager is proposing improvements,” observes Dr. Manjunatha S. Rao, E.I.D. Parry Associate Vice President for Research & Development, who goes by the name Manju.
One of the oldest companies on the Indian Subcontinent, E.I.D. Parry (India) Ltd opened the first sugar mill in India in 1842. It remains one of the country’s top sugar producers, marketing products nationally under the Parry brand while supplying sugar to international companies such as soft drink manufacturers.
"At the mill, people are much more safety conscious," observes Manju. "There has been a cultural change taking place."
According to Manju, many aspects of the Bonsucro Standard complement E.I.D. Parry’s policies to promote sustainable agriculture. The standard has strengthened the company’s efforts to get its sugar cane suppliers to adopt sustainable farming practices while helping it to improve workplace safety and monitoring.
"We have safer workers, and fewer accidents and losses. Efficiency has improved," notes Manju, explaining that the company’s investment in occupational safety training and equipment led to a major drop in the accident rate at the Pugalur Mill. As of December 2015 the mill had gone more than two years without an accident, compared to an average of two to five accidents per year in the past. This is not only good news for workers, it represents savings for the company in medical expenses and lost workdays.
One of the challenges that the company faces as it attempts to mainstream sustainability is the fact that it purchases all the sugarcane it processes from smallholder farmers. E.I.D. Parry Ltd owns and operates nine sugar mills in three Indian states. Five of those mills – Pugalur among them – are located in Tamil Nadu, where approximately 100,000 smallholders sell sugarcane to the company.
As E.I.D Parry Ltd worked toward getting the Pugalur Mill certified, the company’s agricultural extension team helped about 350 farmers to implement sustainable practices, in collaboration with the Dutch nonprofit Solidaridad and the International Finance Corporation. Those champion farmers are now leading the way for more Parry sugarcane suppliers to adopt sustainable agriculture.
The company has a modern lab where soil samples are analyzed to help farmers fine tune their fertilizer use, and its agricultural extension officers teach farmers sustainable practices such as composting and intercropping, which are inexpensive ways to increase production. Manju explains that Parry agronomists don’t recommend pesticides, which are expensive for smallholders and pose health and environmental risks; instead, they promote the use of biological controls. The company’s research and development department has developed and distributed more robust, pest-resistant sugarcane varieties, while raising several species of parasitoids that prey on major sugarcane pests in its laboratory for release on farms.
Benefits of sustainable production
Parry agronomists have documented significant improvements in cane yields on farms where these bio-control agents were introduced, and a company analysis determined that the investment in biological control produced returns of 15 times the cost. E.I.D. Parry researchers also developed a natural pesticide from the fruit and seeds of the neem tree that is so effective that the company now manufactures it for sale across the globe.
"All the farmers in the Bonsucro program have seen environmental and economic benefits. The biggest motivation for the farmers is that they can get greater yields with the same investment."
"The farmers are convinced that by applying the standard, they have been able to get higher yields," observes Manju. "We’ve already seen an average increase of between two and five tons of cane per hectare, which could be due to a combination of parameters. Improvements in water efficiency have also allowed farmers to expand the area of land under irrigation."
According to Manju, this benefits both the farmers and the company. While farmers get better harvests and higher returns through cost savings, Parry enjoys an increased, assured supply and better quality sugar cane, which reduces its cost per unit and improves the utilization of capital assets. At the same time, earning the Bonsucro Certified mark has improved Parry’s image on the international market.
Improving an industry
The Bonsucro Production Standard was developed between 2008 and 2011 through a process that included input from stakeholders in over 20 countries. During its first years, Bonsucro focused on Brazil, which is the world’s top sugarcane producer. By the end of 2015, there were 50 Bonsucro Certified operations, most of which are in Brazil, with the rest in Australia, Honduras and India.
Improving the sugar industry’s environmental and social impacts are Bonsucro’s priorities, but as the Parry case illustrates, implementing its standard is also good for a company’s bottom line. The cost savings and improved efficiencies that Parry has experienced are common among companies that earn the Bonsucro Certified mark.
"Many third-party standards cover environmental or social issues, but Bonsucro recognizes that economic value is intrinsic to sustainability and therefore our standard is about environmental and social issues – and economic value," explains Natasha Schwarzbach, Head of Engagement at Bonsucro.
"The Production Standard has specific indicators for economic value, and 88.6 percent of Bonsucro Certified operations have above average efficiency, while 61.8 percent are above average value to cane, demonstrating an economic improvement."
Analyses of Bonsucro Certified operations have shown that there is a strong business case for adopting the standard. A study by the Brazilian research agency Agroicone released in November 2014 estimated that after discounting the cost of compliance with national laws and own cost of capital, the net present value of Bonsucro certification was between US $2 and $2.40 per ton of sugar. This was primarily a result of reductions in agrochemical use and lower worker absenteeism and accident rates.
Schwarzbach notes that in addition to the cost savings, the standard gives companies a baseline to work with, allowing them to map and manage improvements year on year. Bonsucro also works with an array of end users and other partners to strengthen the market for certified products.
Bonsucro has more than 500 members in 35 countries representing all areas of the supply chain.
"We work with our members to bring certified sugar and sugarcane-derived products, to the market" says Schwarzbach.
Growing commitments to sustainable production
The first of those members to make a public commitment was Bacardi, which committed to purchasing 40 percent of the sugarcane-based products it uses from sustainably certified sources by 2017. More than two-dozen other companies have since made comparable public commitments, among them Coca Cola, General Mills, SABMiller and Unilever. Both PepsiCo and Ferrero have committed to sourcing 100 percent sustainable cane sugar by 2020.
Bonsucro also strives to ensure that there is a strong market for certified ethanol. The organization has worked with the European Union’s Renewable Energy Directive (RED) to ensure that Bonsucro Certified ethanol can be imported to the EU. It is worth noting that Bonsucro’s Production Standard sets targets for reducing greenhouse gas emissions that are more ambitious than those of EU RED.
"We have certified mills and member commitments, but we needed to help move the product in the market place, so we have created an effective engagement mechanism to do this, by training people in the certification system and raising awareness about sustainability," explains Schwarzbach. "We are promoting a strong market for Bonsucro Certified products. We also allow for the trading of credits for companies to demonstrate their support for the sustainable production of sugarcane."
Manju notes that the growing market for sustainable sugar was an important factor in E.I.D. Parry’s decision to engage with Bonsucro. He expects that being the first company in India to earn the Bonsucro Certified mark will improve Parry’s sales, especially given that the company sells approximately 30 percent of the sugar it produces to international corporations that are Bonsucro members and have made public commitments. Nevertheless, improvements in mill efficiency and sustainable farm management may well provide the greatest economic benefits in the long run.
"Sustainability is going to be the new mantra for competitiveness in the future," predicts Manju.