India’s Sugar Production Slumps 18% Amid Lower Recovery, Cane Shortage

India’s sugar production has dropped by 18% in the 2024–25 sugar season, falling to 257.40 lakh metric tonnes (LMT) from 315.40 LMT in the previous year, according to the National Federation of Cooperative Sugar Factories (NFCSF). The decline of 58 LMT is attributed to reduced sugarcane availability, lower sugar recovery rates, and challenges like red rot disease in Uttar Pradesh and late monsoon onset in Maharashtra and Karnataka.

Cane crushing decreased by 11%, from 3,122.61 LMT in 2023–24 to 2,767.75 LMT this season. The average sugar recovery rate fell from 10.10% to 9.30%, a decrease of 0.80 percentage points, further exacerbating the production shortfall.

The Central Government has approved the Fair and Remunerative Price (FRP) of sugarcane for the 2025–26 season (October–September) at ₹355 per quintal, based on a basic recovery rate of 10.25%. However, with the national average sugar recovery dropping to 9.30%, most farmers are unlikely to receive the full FRP, resulting in lower actual payments.

Key States Witness Steep Declines

The top sugar-producing states—Maharashtra, Uttar Pradesh, and Karnataka—accounted for most of the decline. Maharashtra’s production dropped by 19.50 LMT to 80.95 LMT, driven by lower cane yields and a recovery rate decline to 9.1%. Uttar Pradesh’s output fell by approximately 13.90 LMT to 72.40 LMT, impacted by red rot disease and a recovery rate of 9.4%. Karnataka saw an 11 LMT reduction, producing 40.40 LMT, with recovery rates dropping to 9.0% due to erratic rainfall.

Gujarat maintained a stable recovery rate of 10.30%, producing 14.50 LMT, while Uttarakhand recorded a slight recovery rate improvement to 8.9%, yielding 4.20 LMT. However, Tamil Nadu (3.50 LMT), Bihar (2.80 LMT), and Andhra Pradesh (2.20 LMT) reported sharper production contractions due to limited cane availability.

Closing Stocks and Next Season Outlook

India is expected to end the season with a net sugar production of 259 LMT (after 32 LMT ethanol diversion) and closing stocks of 48–50 LMT, sufficient to meet domestic consumption of approximately 24 LMT per month during October and November 2025.

NFCSF forecasts a rebound in 2025–26, supported by a favourable 2024 monsoon and increased cane sowing in Maharashtra (up 10%) and Karnataka (up 8%), which could boost production to 280–290 LMT.

Ethanol Diversion Falls Short

Sugar diversion for ethanol production reached 32 LMT, below the 35 LMT target, due to stagnant ethanol prices (₹73.14/litre for juice-based, ₹67.70/litre for B-heavy molasses). This led mills to produce an additional 3 LMT of sugar, as sugar sales were more profitable.

Stable Prices and Improved Liquidity

Ex-mill sugar prices are stable, estimated at ₹3,850–₹3,900 per quintal, supported by the Centre’s approval of 10 LMT in sugar exports. Mills have cleared ₹91,000 crore—90% of the ₹1.01 lakh crore cane dues—within six months, improving liquidity.

NFCSF Seeks Policy Support

To address challenges, NFCSF urges the Government to:

• Increase the Minimum Selling Price (MSP) of sugar to ₹40/kg to offset production costs (currently ₹41.66/kg).
• Set a 50 LMT ethanol diversion target for 2025–26.
• Revise ethanol prices for juice and B-heavy molasses-based ethanol.
• Maintain a progressive export policy to support port-based states and price stability.