Sugar industry is poised to change drastically over the coming years from cyclical to structural.
We can fall in the footsteps of Brazil which produces ethanol and sugar equally from sugarcane and reduce the overcapacity issue of industry.
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Let's first understand how a sugar factory works:
Sugarcane is crushed in a sugar factory that primarily extracts sugar syrup and fiber which is called bagasse. Bagasse is used to generate electricity, the excess power generates is then sold to the electricity companies.
Sugar syrup is then boiled to extract sugar, the syrup can be boiled up to three times to extract maximum sugar, and the residue left is known as molasses
Molasses can be further processed to generate ethanol and alcohol
The sugar syrup if being boiled twice generate B heavy molasses which has more sugar content hence can generate higher ethanol, the syrup boiled three times leaves C heavy molasses which has very low sugar content having lower ethanol yield
Ethanol can also be extracted directly from sugar syrup without making sugar, this leads to the highest ethanol yield and also fetches higher ethanol prices in the market.