Karnataka Traders, Farmers Blame Centre’s E20 Fuel Policy For Sugar Price Rise
Sugar and jaggery prices in Karnataka have surged sharply ahead of the festive season, hurting consumers and weakening demand. While traders and farmers blame ethanol diversion and hoarding, the government cites lower production and weather damage, responding with stock limits, imports, inspections and earlier crushing operations.
Bengaluru: The sharp rise in sugar and jaggery prices has left consumers in distress ahead of the festive season, with traders already reporting weaker purchases among poor and middle-class families.
The central government attributed the increase to lower production and weather-related crop damage, while opposition leaders and some traders and farmers blame the ethanol-blending policy.
Sugar prices witnessed a steep rise across markets, with retail rates varying. From July 20 to August 20, the prices surged nearly 20 per cent within a month, climbing from Rs 48 rupees per kilogram to Rs 56.
In some markets, traders reported prices rising from Rs 45 to Rs 75 per kg within a month, while wholesale rates reportedly climbed from Rs 52 to Rs 70-75. Some vendors fear prices could touch Rs 100 if the situation continues.
Due to the increase in sugar prices, the prices of sweets and snacks that use sugar as the main raw material, are also likely to increase, hitting the common consumer.
The price hike has also upset consumers in Karnataka, the state that grows the highest sugarcane in South India and produces the highest sugar.
Murali, a grocery trader from Yeshwanthpur, an industrial hub in Karnataka, attributed the increase to ethanol-blending and urged the government to intervene before the Dasara festival in October.
“Ethanol blending is undoubtedly contributing to the steep rise in sugar prices. The government should import sugar, curb black-marketing and control prices before festival demand increases further. Wrong policies are crushing the pockets of ordinary people,” he said.
Murali added that some factories have started using more sugarcane juice for ethanol production instead of sugar, which must be stopped.
Another grocery trader, Vinod Kumar, from Jaya Chamarajendra Nagar, said consumers were reluctant to buy sugar and jaggery after the sudden increase. “This is unbearable for poor and middle-class families. It is painful to see people hesitating to buy sugar and jaggery. I am not sure how they will celebrate the coming festivals without sweets,” he said.
Jaggery prices have increased from Rs 4,500 per quintal to between Rs 6,500 and Rs 7,000, with traders citing lower production and reduced availability.
India, the world’s second-largest sugar producer, has 703 private, cooperative and government-owned mills. Production for 2025-26 was estimated at 3.2 crore tonnes but reached around three crore tonnes.
Consumption ranges from 2.6 crore to 2.8 crore tonnes, usually leaving 60 lakh to 70 lakh tonnes as closing stock. However, the 2024-25 closing stock fell to around 50 lakh tonnes, resulting in a lower opening stock for the current season.
Shaikh Ibrahim, a grocery trader from Shivajinagar, criticised the government’s approach.
“Only a few months ago, India was the second-largest sugar exporter, but it has now become an importer. This exposes the anti-people nature of the Centre’s policies. The government cannot continue misleading people with unacceptable explanations. Ethanol blending must be stopped,” he said.
The government has rejected claims that ethanol production caused the shortage. It said the share of sugarcane diverted for ethanol declined from 13 per cent in 2022-23 to around nine per cent in 2025-26. Nearly one-fourth of ethanol is now produced from grains, particularly maize.
The Centre said adverse weather had damaged sugarcane crops and estimated sugar production at 306 lakh metric tonnes. It expects fresh production from October to help reduce prices. Global sugar prices have also risen 16 per cent in two months to $552 per tonne, while the global shortfall is projected to reach 33 lakh metric tonnes in 2026-27.
To stabilise prices, the government has banned exports, imposed a 400-tonne stock limit on traders until November 30 and restricted bulk consumers from holding more than 15 days of stock from September 1.
It has also permitted the duty-free import of one million tonnes of raw sugar, ordered physical stock inspections and directed mills to begin crushing sugarcane from October 15.
Outrage among Belagavi farmers
Public and farming communities in Belagavi are outraged over an artificial sugar shortage that has driven retail prices to jump during the Shravan festive season. “Corporate companies and brokers exploited a production gap ahead of the November crushing season and started hoarding supplies to inflate costs,” a farmer alleged.
Activists are demanding that the government implement separate dual-pricing tiers for domestic and commercial sugar use, mandate a 70:30 profit-sharing ratio for sugarcane by-products, and raise the Fair and Remunerative Price to 5,000 rupees per tonne to protect growers.
S. Nijalingappa, a senior official of the Sugar Institute, said that the central government’s export ban till September 31 prevented steeper nationwide hikes. “If the center had not issued this order, there would have been a further sugar shortage in the country and prices would have risen even more,” he said.
Karnataka Sugar Minister Rudrappa Lamani announced that officials will launch raids on wholesale warehouses to crack down on artificial hoarding, though he noted that broader price controls remain under the jurisdiction of the central government.
Sugar department interpretation
According to the central Sugar Department, Uttar Pradesh, Maharashtra, and Karnataka are India’s top sugarcane growers. During the 2025-26 season, Karnataka cultivated about 7.5 lakh hectares of cane, supplying 6.40 lakh hectares to factories. This yielded 576 lakh metric tonnes of crushed cane, producing 50 lakh metric tonnes of sugar.
Since Karnataka consumes only 25 to 28 lakh metric tonnes annually, it supplies its remaining 50% surplus to non-growing states like West Bengal, Goa, Manipur, and Kerala.However, a severe Super El Nino weather pattern is expected to significantly slash national crop yields.
Consequently, India’s total production is projected to fall 35 lakh metric tonnes short of its 340 lakh metric tonne target, leaving Karnataka factories with just 9 lakh metric tonnes of current stock. Globally, Brazil ranks first by producing 50% of the world’s sugar, followed by India at 18% and China at 5%.
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Source : ETV Bharat
