India’s sugar stockpile set to shrink as output estimate falls: Govt
The government's sugar production estimate for the 2025-26 season has been revised down, reducing the projected opening stock for the next season starting October 1, 2026
Industry estimates place 2025-26 sugar output in the range of roughly 27.9 to 30.9 million tonnes, well below earlier projections of over 34 million tonnes, following pest attacks and waterlogging from excess rainfall in cane-growing regions
Retail sugar prices have risen sharply, attributed by the government to mills raising rates despite adequate available stock rather than to ethanol diversion
Duty-free import of raw sugar (about 1 million tonnes) has been permitted to ease domestic availability concerns
Diversion of sugar for ethanol blending has reportedly declined in recent weeks as mills weigh better returns from direct sugar sales
Sugar Season and Stock Accounting (October-September Cycle)
India's sugar marketing year runs October 1 to September 30, distinct from the calendar year or the April-March fiscal year used for most other agricultural accounting. Opening stock for a new season equals the previous season's closing stock, and is a key indicator the Ministry of Food and Public Distribution tracks to judge import/export policy and price stabilisation needs.
Key Details
- Sugar season: October 1 – September 30 (aligned with the sugarcane crushing cycle, since cane harvesting concentrates in winter months, especially in UP, Maharashtra, Karnataka)
- Opening stock = previous season's production + previous opening stock − (domestic consumption + exports + ethanol diversion) for that season
- The Ministry of Consumer Affairs, Food and Public Distribution monitors stock-to-consumption ratios to decide on export bans/quotas and import relaxations
- A lower opening stock typically triggers policy tools: export curbs, duty-free import windows, and stock-holding limits on traders to prevent hoarding-driven price spikes
The falling 2025-26 output estimate directly compresses the stock carried into the 2026-27 season, which is why the government has simultaneously acted on the import side (duty-free raw sugar) rather than waiting for the new crop.
Ethanol Blended Petrol (EBP) Programme and Feedstock Diversion
The EBP Programme promotes blending ethanol with petrol to cut crude oil import dependence and provide sugarcane farmers an assured secondary market. Sugar and ethanol production increasingly compete for the same cane/molasses feedstock, creating a direct trade-off between fuel-blending targets and sugar availability.
Key Details
- India achieved the 20% ethanol blending (E20) target in 2025, ahead of the original 2030 goal
- Feedstocks permitted for ethanol: C-heavy molasses (traditional, least sugar-diverting), B-heavy molasses, sugarcane juice, sugar syrup, and (since restrictions were eased) direct sugar
- Government administers procurement prices for ethanol from each feedstock category and reduced GST on ethanol supplied for blending, to keep diversion commercially attractive to mills
- Nodal ministries: Ministry of Petroleum and Natural Gas (offtake via Oil Marketing Companies) and Ministry of Consumer Affairs, Food and Public Distribution (sugar/cane policy)
The reported recent decline in ethanol diversion — mills preferring to sell sugar directly amid high retail prices — shows the feedstock trade-off working in real time; when sugar prices rise enough, the diversion incentive built by ethanol procurement pricing weakens.
Fair and Remunerative Price (FRP) vs State Advised Price (SAP) for Sugarcane
Sugarcane is one of the few crops where the Centre and several states both set procurement prices, creating a two-tier pricing mechanism distinct from the MSP regime for cereals.
Key Details
- FRP is fixed by the Centre on the recommendation of the Commission for Agricultural Costs and Prices (CACP), under the Sugarcane (Control) Order, 1966, and is a statutory minimum mills must pay farmers
- Some states (notably Uttar Pradesh) additionally announce a State Advised Price (SAP), typically higher than the FRP, which state mills must pay
- Unlike MSP for foodgrains procured by the FCI, FRP/SAP are paid directly by private/cooperative sugar mills to farmers — there is no direct government procurement of cane
- FRP is linked to a base recovery rate, with premiums/discounts for actual sugar recovery achieved by a mill
Farmer cane payments are governed by FRP/SAP regardless of retail sugar price swings, meaning the current price rise principally affects consumers and mill margins, not the price farmers are guaranteed for cane.
- Sugar season: October 1 – September 30
- 2025-26 season output estimate: revised down to a range of roughly 27.9-30.9 million tonnes, from an earlier projection above 34 million tonnes
- Opening stock for 2026-27 season projected in the range of 3.3-4.7 million tonnes depending on the estimate cited — among the lowest in several years
- Duty-free raw sugar import quota permitted: approximately 1 million tonnes
- E20 (20% ethanol blending) target achieved in 2025, five years ahead of the original 2030 target
- FRP fixed by the Centre on CACP recommendation under the Sugarcane (Control) Order, 1966; SAP set additionally by some states such as Uttar Pradesh
- Leading cane-growing states: Uttar Pradesh, Maharashtra, Karnataka