Excess Production and Low Offtake to Worsen Troubles for the Sugar Industry

22-Dec-2025 01:16 PM

Mumbai. Domestic sugar mills may now face a crisis of surplus production, similar to the one they grappled with during the 2010s. Sugar production during the current season is expected to exceed domestic demand and requirements, leading to high inventory levels and hindering cash flow.

The central government has permitted the export of 15 lakh tonnes of sugar, while the industry was demanding an export quota of at least 20 lakh tonnes.

Furthermore, the quota fixed for ethanol supply is also insufficient, as it will require only 34-35 lakh tonnes of sugarcane equivalent for its production. The industry had expected to utilize 42-45 lakh tonnes of sugar for ethanol production this time.

Domestic demand and consumption of sugar for food and industrial purposes are not expected to increase significantly.

The total domestic demand for sugar in the current marketing season of 2025-26 is estimated to be between 285-290 lakh tonnes, which is almost the same as the 2024-25 season.

In such a situation, the industry will have a huge stock of unsold sugar, which will slow down its cash flow and could lead to significant difficulties in paying sugarcane farmers on time.

The industry will have to purchase a large quantity of sugarcane this time due to indications of a good harvest.

The increase in the 'Fair and Remunerative Price' (FRP) by the central government has made sugarcane more expensive.

As a result, sugar mills will have to pay higher prices, while the lack of adequate sales (offtake) of the produced stock may lead to a cash crunch for the millers.

Due to limited domestic demand and surplus production, the ex-factory selling price of sugar has also fallen significantly below the cost of production.

This has made sugar production economically unviable. This has made sugar production economically unviable. The government should intervene immediately to address the numerous problems facing the sugar industry.