Sugar Prices Are Rising, But Ethanol Isn’t To Blame: Experts Explain Why

The prices of sugar are at an all-time high, with rates reaching up to Rs 80 per kg in retail markets. The sudden spike in prices has affected consumers financially across the country. One of the reasons behind the steep rise is believed to be the ethanol blending in petrol.

It is believed that the sugarcane was diverted to ethanol production instead of sugar to boost the ethanol blending program (EBP). However, sugar industry experts reject this argument.

The experts argue that the current sugar prices are due to some factors, including declining sugarcane acreage, lower production, a shorter crushing season, sugar hoarding, and exports.

According to a supermarket operator, sugar prices have reached Rs 75-Rs 80 per kg in retail markets in many areas. Former Maharashtra Sugarcane Commissioner Shekhar Gaikwad said that both sugarcane acreage and production are steadily declining.

According to data from the Ministry of Agriculture, the area under sugarcane cultivation in the country decreased from approximately 59 lakh hectares in 2022-23 to approximately 54.5 lakh hectares in 2024-25. This represents a decrease of approximately 4.5 lakh hectares in two years. Total sugarcane production also declined from approximately 49 crore tonnes to approximately 45.3 crore tonnes during the same period.

ALSO READ: 'Public Is Paying Price': Congress Leader Targets E20 Policy Over Sugar Prices, Mileage And Vehicle Damage

This is directly impacting sugar availability. According to Gaikwad, any new policy designed to increase sugarcane and sugar production won't show immediate results. It could take at least three years. Therefore, the government will need to continuously monitor sugar production and available stocks.

Crushing season also became shorter

Jaiprakash Dandegaonkar, former president of the National Federation of Cooperative Sugar Factories, said that the crushing season for sugar mills in Maharashtra has also shortened. Mills that previously had a crushing season of around 150 days have now reduced this period to around 100. According to him, the Fair and Remunerative Price (FRP) for sugarcane farmers and the Minimum Support Price (MSP) for sugar are creating financial pressure on mills.

The current FRP is around ₹3,600 per tonne, while the MSP for sugar is around ₹3,100 per quintal. While this difference should be compared cautiously due to the different units, there is certainly pressure between mill costs and selling prices. Bhairavnath Thombre, president of the Western India Sugar Mills Association, also declined to attribute ethanol prices to the main reason for sugar inflation.

He said that in 2020, a large portion of ethanol was produced from sugar diversion, while now the share of grains has increased significantly. He added that the large difference between initial production estimates and actual production also weighed on the market. Initially, sugar production was estimated to be around 39 million tons, but production remained at around 31 million tons.

ALSO READ: 'Everyone Has Diabetes These Days': Bihar Minister's Remark On Sugar Price Hike Sparks Political Row

This means approximately 8 million tons less sugar was produced than anticipated. Despite this, permission was granted to export 800,000 tons, impacting domestic availability. According to Thombre, amid concerns about the weather, traders also purchased and stockpiled large quantities of sugar, further pressuring prices. The government has now implemented some regulations regarding the sale and stockpiling of sugar.