Crop damage cuts sugar output and drives prices to record highs
Summary
The government said red rot, top borer disease and waterlogging cut its estimate of India’s 2025-26 sugar output by more than 10%, to around 30.6 million metric tonnes from 34.3 million. It said that tighter supply, not ethanol diversion, has pushed prices to record levels.
Business Impact
Sugar spot prices have climbed to a 16-year high of more than Rs 5,300 a quintal in Kolhapur, and domestic prices were cited at Rs 55.70 per kg on August 20, up from Rs 48.18 a month earlier. The ministry said hoarding, speculation, weather damage and weaker global supply are also feeding the rise, while millers are pressing for a higher minimum sale price and liquidity relief.
Competing Views
The government rejected claims that diverting sugar to ethanol caused the shortfall, saying the ethanol share has fallen and that the diversion has helped improve mills’ finances and farmer payments.
The National Federation of Cooperative Sugar Federation said ethanol has not driven the price spike, but it still wants a minimum sale price of Rs 43 per kg, tax relief and soft loans as mills face costs above current realisation.