This paper analyzes the technical efficiency of four sugar factories in West Godavari District over the period 1985-86 to 2005-06. High efficiency is very important for the survival of a factory. Technical efficiency of a sugar factory depends upon its capacity to extract maximum sugar from the sugarcane. It is determined by several factors, such as reduced mill extraction, reduced boiling house extraction, reduced overall extraction, and sugar loss. The paper reveals that out of the four sugar factories, Andhra Sugars-I at Tanuku maintained minimum sugar loss level and extracted maximum sugar from cane throughout the study period. Thus, the study concludes that this factory was better than the other sugar factories in terms of technical efficiency during the study period.

Sugar industry is one of the largest agro-based industries in India. India is the largest consumer and second largest producer of sugar in the world. At present, India is one of the major sugar producing countries in the world, with Brazil being ahead of India in respect of annual production of sugar. The first sugar mill in the country was set up in 1903 in the United Provinces (Government of India, 2004). The industry expanded slowly until 1932, when tariff protection was granted against imported Javanese sugar. At that time, there were only 31 sugar factories having small capacity, and most of them were concentrated in Uttar Pradesh and Bihar. In 1950-51, there were 139 factories producing 113,400 tons of sugar. By 1968-69, 66 more sugar factories were added to the list which increased the production capacity to 36 lakh tons of sugar. In 1980-81, there were 315 sugar factories in the country producing 51.5 lakh tons of sugar. In 1985-86, there were 342 sugar factories in the country producing 70.2 lakh million tons of sugar. Indian sugar factories are located in the rural areas. In India, sugar is produced only from sugarcane and about 45 million sugar farmers cultivate sugarcane, resulting in an annual production of 281.6 million tons in 2002-03 and 236.1 million tons in 2003-04. Sugarcane occupies about 3% of the total cultivated area, and it is one of the most important cash crops, contributing about 7.5% of the gross value of agricultural production in the country (Government of India, 2004).

The present paper estimates the technical efficiency of sugar factories in West Godavari District of Andhra Pradesh for the period from 1985-86 to 2005-06. In this district, there are four sugar factories operating under private management. The study analyzes the technical efficiency of the four factories during pre- and post-globalization periods. Technical efficiency is one of the parameters of the performance of a factory. The main technical efficiency indicators in the case of sugar factories are: reduced mill extraction, reduced boiling house extraction, reduced overall extraction, and sugar loss (Sinha, 1988).

Managerial Economics Journal, Sugar Factories in West Godavari District, Agricultural Production, Cooperative Management, Reduced Mill Extraction, Pre-Globalization Period, Post-Globalization Period, Reduced Boiling House Extraction, South Indian Sugar Mills, Technical Efficiency of Sugar Factories.