Government denies ethanol link to soaring sugar prices, cites low output and hoarding

The government announced that it is closely tracking the recent increase in sugar prices, which rose from Rs 48.18 per kg on 20 July to Rs 55.70 per kg on 20 August. It rejected the notion that ethanol production is to blame, emphasizing that the share of sugarcane used for ethanol fell from about 12% in 2022-23 to roughly 9% in 2025-26, while most ethanol now derives from maize. Officials cited lower domestic output—estimated at 306 LMT versus an earlier 343 LMT forecast—due to Red Rot, Top Borer disease and waterlogging, as well as higher demand, hoarding, and a global sugar deficit of about 33 LMT.

To curb scarcity, the ministry imposed a 400-tonne stock cap on dealers, limited bulk consumer holdings, and authorized duty-free imports of 10 LMT of raw sugar. It also urged states and mills to begin crushing from 15 October to boost October production beyond the usual 3-4 LMT. The statement reaffirmed the ethanol programme’s benefits for farmers and pledged continued monitoring of stocks, prices and market practices.