In a significant move aimed at restoring Bihar’s once-thriving sugar economy, the state government on Monday signed a Memorandum of Understanding with the National Federation of Cooperative Sugar Factories Ltd. The agreement marks a renewed policy push to strengthen the cooperative sugar sector and revive rural industrial activity across key cane-growing districts.
Under the proposed plan, new cooperative sugar mills will be set up in Madhubani and Darbhanga districts, regions historically associated with sugarcane cultivation. In the first phase, feasibility studies will be conducted and Detailed Project Reports will be prepared to assess financial sustainability, technical requirements and long-term operational viability. The initiative is being seen as a structured attempt to avoid the pitfalls that led to the collapse of earlier mills.
The revival plan is expected to provide much-needed relief to sugarcane farmers, many of whom have struggled for decades due to the absence of functional local mills. By ensuring access to nearby procurement centres and organized crushing facilities, the government hopes to guarantee fair and timely prices for farmers’ produce. Reduced transportation costs and shorter supply chains are likely to improve farm-level profitability while also creating direct and indirect employment opportunities in rural areas.
Bihar was once home to more than 30 sugar mills and ranked among India’s prominent sugar-producing states. However, over the past three decades, the industry witnessed a steady decline. Major closed units include Sakri Sugar Mill, Shyam Sugar Mill and Raiyam Sugar Mill in Darbhanga district; Motipur Sugar Mill in Muzaffarpur; Goraul Sugar Mill in Vaishali; Warisaliganj Sugar Mill in Nawada; Lohat Sugar Mill in Madhubani; Madhora Sugar Mill in Saran; Chanpatia Sugar Mill and Chakia Sugar Mill in East Champaran; as well as mills in Siwan and Samastipur.
Many of these units ceased operations in the early to mid-1990s, while a few managed to survive until the 2000s before finally shutting down. A large number were brought under the Bihar State Sugar Corporation after nationalisation, but mounting financial stress gradually rendered them unviable.
Chronic financial losses were a primary reason behind their closure. Outdated machinery, low sugar recovery rates and lack of technological upgrades made Bihar’s mills uncompetitive compared to more modern and integrated units in states such as Uttar Pradesh and Maharashtra. Operational inefficiencies were compounded by management challenges and delayed modernization efforts.
Farmers frequently complained about delayed cane payments, which discouraged them from supplying to local mills and led to a decline in sugarcane acreage across several districts. Recurrent floods in north Bihar, erratic weather patterns and weak infrastructure further disrupted cane supply chains. High production costs and growing liabilities made it increasingly difficult to restart operations once they had stopped.
As mills fell silent, their premises deteriorated, machinery rusted and skilled workers migrated in search of employment. The collapse of the sugar sector significantly affected rural livelihoods and local economies that once revolved around cane cultivation and processing. Although successive governments announced revival packages and leasing proposals, only limited progress was achieved on the ground.
The new MoU with the National Federation of Cooperative Sugar Factories Ltd signals a fresh beginning. By focusing on cooperative models, financial due diligence and farmer-centric policies, the state government aims to rebuild confidence in Bihar’s sugar sector and restore its contribution to rural growth.