Sugar price surge in Maharashtra, but ethanol not the culprit, say experts
Sugar prices have risen sharply in Chhatrapati Sambhajinagar, Maharashtra, reaching Rs 75-80 per kg for loose sugar, a supermarket owner said on Sunday. The surge has sparked a political debate, with opposition parties alleging that increased ethanol blending in petrol is pushing up prices and imposing an additional financial burden on people. The government has rejected these claims, blaming the industry for jacking up prices despite sufficient stocks to meet domestic demand.
Experts, however, attribute the price rise to a combination of falling sugarcane production, shorter crushing seasons, and stockpiling by traders, and largely rule out the diversion of sugar towards ethanol production as the main reason.
Production decline and policy bottlenecks
Former Maharashtra Sugar Commissioner Shekhar Gaikwad said sugarcane production and yields are declining, affecting overall sugar output. He noted that even if the government frames a new policy to increase production, it would take around 30-36 months to show results, and that the supply-sugarcane producing states are shrinking. He also advised the government that it needs to check the sugar stocks again.
Jayprakash Dandegaonkar, former president of the National Federation of Cooperative Sugar Factories, highlighted that Maharashtra, the country's largest sugar producer, has seen the crushing season reduce from around 150 days a year to nearly 100 days, as the business is no longer affordable for factories. He said factories 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. The gap between the FRP and MSP is causing losses to sugar mills and needs to be addressed, he added.
Ethanol's shrinking role
Bhairavnath Thombre, president of the West Indian Sugar Mills Association (WISMA), said ethanol production cannot be blamed for the current rise. He explained that in 2020, the entire 100 per cent of ethanol was produced through sugar diversion, but that share has now fallen to around 30 per cent, with foodgrains accounting for a larger share.
Thombre also pointed to a production shortfall: 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 of sugar. He added that traders, anticipating the impact of El Niño on sugarcane and sugar production, purchased and stocked large quantities of sugar, further pushing up prices.
To ease supplies, the government has introduced certain rules for sugar purchases, and once the crushing season begins, sugar mills can add around 15-20 lakh tonnes of sugar to the market every month, Thombre said.
Government data shows decline in cane area and output
According to the Union Ministry of Agriculture and Farmer Welfare, the area under sugarcane cultivation reduced from 5885.32 thousand hectares in 2022-23 to 5449.93 thousand hectares in 2024-25. Sugarcane production in India was 490533.35 thousand tonnes in 2022-23, declining to 453158.40 thousand tonnes in 2023-24, and to 454610.97 thousand tonnes in 2024-25.
These figures underpins the experts' view that the current price surge is rooted in lower supply rather than ethanol diversion.
Perspectives
Opposition parties allege that the ethanol blending policy is pushing up sugar prices and burdening people.
Government rejects the claims, blaming the industry for price increases despite sufficient stock.
Experts and industry officials attribute the price rise to declining production, shorter crushing seasons, and stockpiling by traders, rather than ethanol diversion.