1 week ago
Experts Reject Ethanol Link to India’s Rising Sugar Prices
Sugar prices in India have gone up sharply.
Some critics blamed the government’s ethanol programme, which uses sugar-related crops to make fuel.
Experts interviewed in the report said ethanol was not the main reason for the increase.
They said bad weather, crop diseases, unreliable production estimates, and people storing sugar to sell later were more important causes.
The government expects less sugar to be produced than it first estimated.
It allowed 10 lakh tonnes of raw sugar to be imported without duty to help prevent shortages.
It also limited how much sugar dealers and large buyers can keep.
The Indian Sugar Mills Association rejected claims that sugar mills created an artificial shortage.
Experts said ethanol blending was not responsible for India’s recent sugar price rise.
They attributed the increase to lower production, crop disease, weather, weak data, and speculative stocking.
Sugar output is projected at 306 lakh tonnes, below the initial estimate of 343 lakh tonnes.
Retail sugar prices rose from Rs 48.18 to Rs 55.70 per kg between July 20 and August 20.
The government approved duty-free imports and imposed stock limits and other measures to contain prices.
- Who
- The Narendra Modi government, agricultural experts, sugar mills, traders, and consumers are involved.
- What
- India is facing rising sugar prices amid lower production estimates, ethanol-policy criticism, and government intervention.
- Where
- Across India, including sugar-producing states and the national sugar market.
- When
- Retail prices rose from July 20 to August 20; measures apply through dates extending to September 30, 2026.
- Why
- Experts cited weather damage, Red Rot and Top Borer diseases, weak agricultural data, hoarding, and speculative stocking.
Ethanol Critics and Hoarding Concerns
Government and Sugar-Mill Defence
Cause of rising prices
Ethanol Critics and Hoarding Concerns
Critics link the sugar shortage and price increase to ethanol diversion and argue that sugar mills or market players may be hoarding supplies.
Government and Sugar-Mill Defence
Experts cited in the report rejected a significant ethanol-price link, while the Indian Sugar Mills Association attributed the increase mainly to lower production and weather-related factors.
Responsibility for stockpiling
Ethanol Critics and Hoarding Concerns
Deepayan Debnath and Suresh Babu pointed to hoarding, speculation, and possible exploitation of consumers by market participants, including sugar mills.
Government and Sugar-Mill Defence
Indian Sugar Mills Association president Niraj Shirgaokar categorically denied that mills created artificial scarcity or raised ex-mill prices, saying speculative stocking and lower output were responsible.
Reliability of production data
Ethanol Critics and Hoarding Concerns
Suresh Babu said the large revision in output estimates exposes inadequate transparency and outdated agricultural data systems.
Government and Sugar-Mill Defence
The government attributed the lower forecast to Red Rot, Top Borer, and extreme rainfall, while presenting imports and monitoring measures as responses to the changing outlook.
Key facts
- Duty-free imports
- The government allowed imports of 10 lakh tonnes of raw sugar.
- Retail price increase
- The all-India retail sugar price rose from Rs 48.18 per kg on July 20 to Rs 55.70 on August 20.
- Projected production
- Sugar production is expected to be around 306 lakh tonnes, compared with an initial estimate of 343 lakh tonnes.
- Domestic consumption
- India consumes roughly 280–290 lakh tonnes of sugar annually.
- Ethanol diversion
- Around 3 million tonnes of sugar were diverted to ethanol for the 2025–26 season.
- Stock limits
- Dealer sugar stocks were capped at 400 tonnes until November 30, while bulk consumers were limited to 15 days’ consumption from September 1.
- Export restriction
- Sugar exports were banned until September 30, 2026.
Quotes
Professor Deepayan Debnath
Professor at the Food and Agricultural Policy Research Institute, University of Missouri.
“Although deviations in projections are normal, there is a serious lack of transparency in agricultural data. Not just sugar, the problem of estimates is a broader issue for all crops. The methods of data collection have remained unchanged over the last 40-50 years, but it is very important to modernise the process, which involves digitising information that can be updated in real time.”
telegraphindia.com
“The government has made the import decision keeping in mind the worst-case scenario and must have room for broad options. This is a political economy issue as any outrage over any crop can topple the government.”
telegraphindia.com
Sources
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