Prakash Naiknavare, Managing Director of the National Federation of Cooperative Sugar Factories (NFCSF), has called on the Indian government to disclose the country's estimated sugar stock after the ongoing fortnight-long physical verification of mills, arguing that transparency would help check the current price rise. The demand comes amid speculation that sugar stock at the end of the current season on September 30 will fall to about 35 lakh tonnes (lt), a level considered inadequate to meet demand in the first two months (October-November) of the next season, according to a report in The Hindu BusinessLine.
Price spike and market drivers
All-India average sugar prices have increased 8 per cent in the retail market and 7 per cent in the wholesale market over the past month, according to Consumer Affairs Ministry data cited in the report. The actual increase is even higher in Delhi and the national capital region, where prices have moved to ₹55-56 per kg from about ₹46-48 per kg a month ago; official data placed the average Delhi price at ₹49 per kg on August 12. The wholesale price has since eased to about ₹46 per kg from roughly ₹48 after the government imposed a stock-holding limit.
Naiknavare attributed the price rise to overselling of sugar against allotted quotas and to information on stock levels reaching all stakeholders. "This is not a very natural spike, though it was expected in the months to come, not now," he told The Hindu BusinessLine. He listed three drivers:
"One is the perceived scarcity of sugar, based on fundamentals, has been understood by all the stakeholders - consumers, producers, farmers, traders, and government. Besides, the likely impact of Super El Nino on the crop. Third, the market is a little disturbed due to overselling of quota."
Government's verification and stock limits
The government announced on July 24 that it would conduct a physical verification of sugar stock in every mill, with the exercise to be completed by August 14, according to the report. On July 28, it imposed a stock limit prescribing a maximum of 400 tonnes of sugar that traders can keep at any point until November 30. Naiknavare said the government should come out with the official number after the verification. "Starting next week, the government, may come out with an official number about sugar stock. This is very crucial to avoid further speculation," he added.
Supply outlook and early crushing push
Net sugar production in the current season is seen at 279 lt, Naiknavare said. With demand in the first month of the next season (October) pegged at about 24 lt, he said there will be adequate sugar for October, but supply will be "a bit tight" in November. The government has requested mills to start crushing early in October so that at least 15 lt could be produced, against about 5 lt normally processed. Millers, in turn, have asked for incentives to make early crushing financially viable because of lower-than-normal recovery of cane juice, the report noted.
Naiknavare said mills in Karnataka normally start early; if the rest of the mills start on October 15, fresh sugar plus the carryover balance from the current season should help tide over the November situation, and after December the new sugar will flow well in the market.
Ethanol diversion to face tighter scrutiny
After the physical verification is completed, the government's first action is likely to be regulating the diversion of sugar (in terms of sucrose) to ethanol, as the top priority has always been to ensure domestic availability of sugar, according to the report. An estimated 24 lt of sugar is likely to be diverted for ethanol in the current season (October-September), down from 34 lt in 2024-25. Industry experts rule out any scope for the biofuel during 2026-27. Historical diversion figures reported include 43 lt in 2022-23 and 24 lt in 2023-24.
| Season | Sugar diverted to ethanol |
|---|---|
| 2022-23 | 43 lt |
| 2023-24 | 24 lt |
| 2024-25 | 34 lt |
| Current season (Oct–Sep) | 24 lt (estimated) |
The government needs to inform sugar mills in advance if it wants to restrict the use of sugarcane juice or B-heavy molasses for ethanol production, industry leaders said, adding that an announcement is expected by this month-end.
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