Sugar prices increase on production drop; mills divert sugarcane for ethanol
With sugar prices ruling below the cost of production of the mills, the diversion of sugarcane products for ethanol production helps sugar mills to maintain a steady income.
A drop in sugarcane production is pushing up sugar prices as sugar mills gear up to supply more ethanol, a byproduct of sugarcane, to oil marketing companies.
Against 3.2 million tonnes in 2021-22 (marketing year from October to September), the government has fixed an allotment of 4.5 million tonnes of ethanol in 2022-23.
With sugar prices ruling below the cost of production of the mills, the diversion of sugarcane products for ethanol production helps sugar mills to maintain a steady income.
While the cost of sugar production is around Rs 36 per kg, the wholesale prices are in the range of Rs 31-32 per kg.
In 2022-23, production is expected to be lower by 5 to 10 percent from the previous year. As a result, sugar prices have moved up to Rs 34-36 per kg from Rs 31.50 to 32.50 per kg.
