Sugar Surplus to Hurt Industry

12-Jan-2026 12:54 PM

Mumbai: The sugar industry, a long-time pillar of the rural economy, is facing a paradoxical crisis in the 2025-26 marketing season. Domestic sugar production is showing signs of a significant increase during the current season, leading to a surge in supply.

On the other hand, demand and consumption are expected to remain stable, and only a limited quantity will be used for ethanol production. Furthermore, subdued international market prices are slowing down sugar export shipments. The ex-factory selling price of sugar has already fallen considerably.

Industry analysts have warned that high stocks, declining margins, and cash flow constraints could make it extremely difficult for millers to pay sugarcane farmers on time.

With vigorous sugarcane crushing continuing at sugar mills, the burden of outstanding payments is increasing, necessitating immediate government intervention.

According to data from the top industry body, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), sugar production in Maharashtra surged by 62 percent to 48.61 lakh tonnes during the first quarter of the current 2025-26 marketing season (October-December 2025), while production also increased in Uttar Pradesh and Karnataka.

ISMA estimates that total sugar production in India will reach 343.50 lakh tonnes during the entire 2025-26 marketing season, while the US Department of Agriculture (USDA) projects total production at 350 lakh tonnes.

Domestic sugar consumption, however, is expected to remain stagnant at 280-285 lakh tonnes. Increased health awareness could further reduce sugar consumption. In this scenario, the industry will be left with a massive surplus stock of sugar, tying up its working capital.