India sugar prices rise 15.6% as lower production, global supply tighten

INDIA – India’s sugar prices rose 15.6% in one month as lower-than-expected domestic production, festive demand, weather-related crop damage and tighter global supplies put pressure on the market, although the government said stocks remain adequate until the new crushing season.  

Data showed sugar prices increased from Rs 48.18 per kg on July 20, 2026, to Rs 55.70 per kg on August 20. The Press Information Bureau (PIB) said the increase should be viewed against a longer-term trend, with retail sugar prices rising around 3% annually between August 2024 and July 2026.  

India is the world’s second-largest sugarcane producer, with the sector supporting nearly 50 million farmers and about 500,000 workers in sugar factories and allied industries.  

Sugarcane production reached 500 million tonnes in 2025-26, according to the Third Advance Estimate from the Ministry of Agriculture and Farmers Welfare, up 43.5% from 348.44 million tonnes in 2015-16.  

Sugarcane cultivation also expanded from 49.27 lakh hectares in 2015-16 to 58.87 lakh hectares in 2025-26. Uttar Pradesh and Maharashtra remain the leading sugarcane-producing states.  

The government has fixed the Fair and Remunerative Price (FRP) of sugarcane for the 2026-27 season at Rs 365 per quintal, linked to a basic recovery rate of 10.25%. This compares with Rs 230 per quintal in 2016-17 at a recovery rate of 9.5%.  

The government said the ethanol programme has helped address surplus sugar production and improve mill finances. India produces around 300-340 lakh tonnes of sugar annually against domestic consumption of 280-290 lakh tonnes. In surplus years, excess stocks can block mill funds and delay farmer payments, while diversion to ethanol has helped ease the pressure.  

The share of sugar diverted to ethanol declined from around 12% in 2022-23 to around 9% in 2025-26. Nearly three-fourths of India’s ethanol now comes from grains, particularly maize.  

As of August 20, around 97% of sugarcane dues for 2025-26 had been paid to farmers. Stronger mill finances have also reduced dependence on government support, according to the government.  

Domestic sugar production is now expected at around 306 lakh tonnes, against an initial estimate of 343 lakh tonnes. Red Rot, Top Borer and waterlogging from excess rainfall have affected production.  

The government said “adequate stocks” are available to meet domestic demand until the new crushing season begins in October. It also observed that speculation and hoarding by some mills and traders contributed to the recent price increase.  

Meanwhile, the global sugar deficit for 2026-27 is estimated at around 33 lakh tonnes, while international sugar prices rose from $474 per tonne on June 30 to $552 on August 20, an increase of more than 16%.  

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