New Delhi (India): India’s sugar industry is facing a significant decline in production for the 2025 sugar season (SSY25), with output expected to fall below 27 million metric tons (MMT), a sharp drop from 31.8 MMT recorded in the previous season. According to a report by Centrum, as of February 15, 2025, the total sugar production stands at 19.77 MMT, reflecting a 12 per cent decline compared to the same period last year.
The primary reasons behind this downturn include higher sugar diversion for ethanol production, reduced cane availability, and lower recovery levels. State-wise data reveals that Maharashtra is the worst-hit, with a 14 per cent YoY drop in sugar production. Karnataka and Uttar Pradesh (UP) have also experienced a 13 per cent and 8 per cent decline, respectively.
In Karnataka, cane availability has fallen by 22 per cent YoY in the last fortnight, resulting in a sharp reduction in crushing volumes. Maharashtra has seen a 7.8 per cent drop in cane availability, while UP has seen a 1.4 per cent increase for the season.
The declining cane supply has forced several sugar mills to halt operations earlier than anticipated. The number of mills halting operations has surged from 23 on January 31 to 51 by February 15. Overall sugarcane crushing for SSY25 has dropped to 218 MMT, down 4.5 per cent from 228 MMT in the previous season.
Policy Update and Impact on Industry
In a recent policy update, the Indian government reversed the price hike for Food Corporation of India (FCI) rice, setting the price at Rs 22.5/kg. However, the ethanol price revision disappointed industry players, as only the C-heavy (CH) ethanol route saw a 3 per cent price increase. Experts had expected a broader hike covering B-heavy (BH) and direct ethanol production routes, which could have provided a more balanced support to the sugar industry.
Industry experts believe that mills may prioritize C-heavy ethanol production, which could lead to higher sugar output and lower ethanol production.
Stable Sugar Prices and Profitability Outlook
Despite the production decline, sugar prices have remained stable and remunerative. In Uttar Pradesh, sugar prices are around Rs 41,000 per ton, while in Maharashtra, they are above Rs 37,500 per ton. These favorable price levels are expected to boost profitability for sugar mills in the fourth quarter of FY25 and FY26.
Additionally, the government’s approval of a 1 MMT sugar export quota is expected to further support domestic sugar prices, aided by a weak rupee and rising global sugar prices.