No ethanol link, low cane output, stockpiling push up sugar prices: Experts

Experts attribute the sharp rise to declining sugarcane output, shorter crushing seasons and trader stockpiling, while rejecting ethanol diversion as the main cause

Sugar prices have skyrocketed in the market amid declining sugarcane production and increased stockpiling by traders, according to experts who attributed the sharp rise to multiple factors but ruled out diversion of sugar towards ethanol production as the main reason.

Opposition parties have been targeting the Centre over increased ethanol blending in petrol, alleging that the policy was pushing up sugar prices and imposing an additional financial burden on people.

The government has rejected the claims and instead blamed the industry for jacking up prices despite the country having sufficient stock to meet domestic demand.

The rate of loose sugar in Chhatrapati Sambhajinagar, Maharashtra, has risen to Rs 75-80 per kg, a supermarket owner said on Sunday.

 

Experts attributed the sharp rise to multiple factors but ruled out diversion of sugar towards ethanol production as the main reason.

Former Maharashtra Sugar Commissioner Shekhar Gaikwad said sugarcane production and yields are declining, affecting overall sugar production. The number of states producing sugarcane is also shrinking, he added.

''The sugarcane production in India is declining. The tonnage is also declining to some extent, which is affecting overall sugar production. Even if the government frames a new policy to increase production, it will take around 30-36 months to show results. The number of key sugarcane producing states is also decreasing. The government needs to check the stocks of sugar again,'' he told PTI.

Former National Federation of Cooperative Sugar Factories president Jayprakash Dandegaonkar said Maharashtra, the country's largest sugar producer, has also seen a reduction in the sugarcane crushing season.

''The span of sugarcane crushing in Maharashtra has also gone down. Factories that crushed sugarcane for around 150 days a year have reduced the season to nearly 100 days as the business is no longer affordable. We are paying farmers a Fair and Remunerative Price (FRP) of Rs 3,650 per tonne, while the Minimum Support Price (MSP) for sugar is Rs 3,100," he said.

Dandegaonkar said the gap between the FRP paid to farmers and the MSP is causing losses to sugar mills and needs to be addressed.

Bhairavnath Thombre, president of the West Indian Sugar Mills Association (WISMA), said ethanol production cannot be blamed for the current rise in sugar prices.

"Earlier, in 2020, the entire 100 per cent of ethanol was produced through sugar diversion. That share has now fallen to around 30 per cent, with foodgrains accounting for a larger share," Thombre said.

He said government estimates and permission to export sugar had also affected domestic prices. The initial estimate for sugar production was 390 lakh tonne, but actual production fell to 310 lakh tonne. The government subsequently permitted exports of around 8 lakh tonnes, he said.

Thombre added that traders, anticipating the impact of El Nino on sugarcane and sugar production, purchased and stocked large quantities of sugar, further pushing up prices.

"The government has now introduced certain rules for sugar purchases. Once the crushing season begins, sugar mills can add around 15-20 lakh tonnes of sugar to the market every month," he said.

According to the figures of the Union Ministry of Agriculture and Farmer Welfare, the area of sugarcane cultivation reduced significantly since 2022-23 from 5885.32 thousand hectares to 5449.93 thousand hectares in the year 2024-25, impacting sugarcane production.

The overall sugarcane production in India was 490533.35 thousand tonnes in 2022-23, which declined to 453158.40 thousand tonnes. In 2024-25, sugar production remained at 454610.97 thousand tonnes.