Production behaviour and returns to scale in sugar and biofuel industries in maharashtra.

This study examines the production behaviour and returns to scale within the sugar and biofuel industries in Maharashtra, India, using a panel dataset covering 71 cooperative sugar mills over a ten-year period (2006-07 to 2015-16). The research applies the Cobb-Douglas production function to analyse the relationships between key input variables such as share capital, salary and wages, cane cost, conversion cost, and depreciation and interest. The empirical analysis, conducted through pooled regression, fixed effects and random effects models, reveals a general trend of decreasing returns to scale across most mills, with better performance observed among mills integrated with fuel ethanol production. The findings highlight the crucial role of capacity utilisation, technological upgrading, and diversification in enhancing operational efficiency. Furthermore, the study underscores the potential for biofuel production to stabilise the volatile revenue patterns typically seen in the sugar sector.