New Delhi : Is sugar going to be costlier soon?
The country might see inflation in sugar prices if trends in the sugar industry are to be believed. Lower than expected production and a tight balance sheet, industry sources say can see sugar prices sky-rocketing especially in September –October, just before the major festival season of Dussehra and Diwali.
The 2024-25 sugar season has been marked by lower than normal per acre cane yield as well as divergent production figures by both the Indian Sugar Millers Association (ISMA- the body representing private millers) and the National Federation of Cooperative Factories Association (the body which represents cooperative millers).
The Federation in its final estimate has fixed sugar production at 259 lakh tonnes (lt). ISMA’s production figure is 264 lt. The lower than expected production is because of early flowering in Maharashtra and Karnataka as well as top shoot borer and red rot in the standing crop in Uttar Pradesh–- the top three sugar producers in the country.
However, industry sources said the matter is now compounded with 10 lt of sugar exports allowed by the central government.
“Depending on the production figure, the opening stock of sugar in October would be anything between 54- 44 lt. India’s domestic consumption is 25 lt but given it is the start of the festive season, September and October is expected to see higher consumption,” said an industry insider. India’s annual sugar consumption is expected to be 280 lt.
Sugar consumption is expected to be higher as the early advent of summer has seen increased demand in cold drinks, ice creams etc. The ice cream industry has predicted good growth in demand due to the increased heat.
“By all accounts the opening stock can be too tight for comfort which can result in an increase in sugar prices in the retail market,” the industry insider said. At present retail sugar prices range from Rs 43-45/kg, according to data from the Price Monitoring Cell, Ministry of Food and Civil Supplies.
The 10 lt exports, experts said can really drive up the prices especially for mills in Maharashtra and Karnataka. These mills normally buy out the “export quota” from mills from Uttar Pradesh and physically ship out the sugar. Mills in these two states use their proximity to the sea to export sugar more.
“Thus when the 2025-26 season opens, mills of Maharashtra and Karnataka would have little or no sugar to meet their domestic demands,” said a miller from Maharashtra. As per industry sources, around 1.6 lt of sugar has already been shipped out of the country with contracts for further 1.6 lt being made.
“If the exports are held back, then availability would certainly increase but it would have a long term detrimental effect on India’s image in the global market. A middle path can be found by which the quota can be reduced to increase domestic availability,” the miller added.
The country might see inflation in sugar prices if trends in the sugar industry are to be believed. Lower than expected production and a tight balance sheet, industry sources say can see sugar prices sky-rocketing especially in September –October, just before the major festival season of Dussehra and Diwali.
The 2024-25 sugar season has been marked by lower than normal per acre cane yield as well as divergent production figures by both the Indian Sugar Millers Association (ISMA- the body representing private millers) and the National Federation of Cooperative Factories Association (the body which represents cooperative millers).
The Federation in its final estimate has fixed sugar production at 259 lakh tonnes (lt). ISMA’s production figure is 264 lt. The lower than expected production is because of early flowering in Maharashtra and Karnataka as well as top shoot borer and red rot in the standing crop in Uttar Pradesh–- the top three sugar producers in the country.
However, industry sources said the matter is now compounded with 10 lt of sugar exports allowed by the central government.
“Depending on the production figure, the opening stock of sugar in October would be anything between 54- 44 lt. India’s domestic consumption is 25 lt but given it is the start of the festive season, September and October is expected to see higher consumption,” said an industry insider. India’s annual sugar consumption is expected to be 280 lt.
Sugar consumption is expected to be higher as the early advent of summer has seen increased demand in cold drinks, ice creams etc. The ice cream industry has predicted good growth in demand due to the increased heat.
“By all accounts the opening stock can be too tight for comfort which can result in an increase in sugar prices in the retail market,” the industry insider said. At present retail sugar prices range from Rs 43-45/kg, according to data from the Price Monitoring Cell, Ministry of Food and Civil Supplies.
The 10 lt exports, experts said can really drive up the prices especially for mills in Maharashtra and Karnataka. These mills normally buy out the “export quota” from mills from Uttar Pradesh and physically ship out the sugar. Mills in these two states use their proximity to the sea to export sugar more.
“Thus when the 2025-26 season opens, mills of Maharashtra and Karnataka would have little or no sugar to meet their domestic demands,” said a miller from Maharashtra. As per industry sources, around 1.6 lt of sugar has already been shipped out of the country with contracts for further 1.6 lt being made.
“If the exports are held back, then availability would certainly increase but it would have a long term detrimental effect on India’s image in the global market. A middle path can be found by which the quota can be reduced to increase domestic availability,” the miller added.
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Source : The Indian Express
