Increased Sugar Production Will Put Pressure on the Industry

02-Jan-2026 08:50 PM

New Delhi. Indications are that domestic sugar production will increase significantly this season compared to the previous one, and if consumption does not increase correspondingly, the industry will be left with a large surplus stock at the end of the current marketing season.

This will disrupt cash flow, and the working capital of sugar mills will remain tied up in warehouses. As a result, millers will not have sufficient funds to pay sugarcane farmers on time.

Sugar mills' income from ethanol is also likely to decrease because the government has not increased the price of ethanol produced from sugarcane components, and the quantity of ethanol tendered by oil marketing companies will require only 3.4 million tonnes of equivalent molasses for its production.

The ex-factory selling price of sugar has fallen below its cost of production. Sugarcane supply is increasing rapidly, and sugar mills are obligated to crush it.

Consequently, the outstanding dues owed by sugar mills to sugarcane farmers are likely to increase rapidly.

Millers would not face any difficulty in making these payments if they had better income, but the situation is quite different this time.

In the first quarter of the current marketing season, i.e., October-December 2025, sugar production in the country increased to 11.9 million tonnes,

which is 23 percent more than the 9.5 million tonnes produced during the same period last year. Excellent sugar production is also expected during the upcoming quarter (January-March 2026).