The Union government is preparing a set of crucial policy interventions to address a looming domestic sugar surplus and secure timely payments for sugarcane farmers. A formal announcement on these measures is expected in January, as revealed by Food Secretary Sanjeev Chopra.
Monitoring Production and Preventing Stock Buildup
Speaking at the Annual General Meeting of the Indian Sugar & Bio-Energy Manufacturers Association (Isma), Chopra stated that the government is closely watching the 2025–26 sugar season, where gross production is projected to hit 34.3 million tonnes. The primary goals are to prevent excessive stock accumulation and ensure farmers receive their dues promptly.
"We are actively working and we need to ensure that the stock buildup is prevented to the extent possible, and the sugarcane farmers get their payment in time. You would come to know in due course about the various decisions that the government would take," Chopra told reporters.
Key Demands from the Sugar Sector
The anticipated decisions are linked to long-standing industry demands. These include a significant increase in the minimum sale price (MSP) of sugar from the current ₹31 per kg to at least ₹41 per kg. The MSP has remained stagnant since February 2019.
Other major demands involve raising the share of ethanol produced from sugarcane from 28% to 50%, and permitting sugar exports beyond the already sanctioned 1.5 million tonnes for the 2025-26 season.
The call for an MSP hike has gained urgency. The National Federation of Cooperative Sugar Factories Ltd (NFCSF) recently urged the government to act, citing rising production costs, falling ex-mill prices, and severe financial stress on mills and farmers. Isma data shows the pan-India average cost of production has risen to ₹41.66 per kg.
Mounting Pressure and Economic Reality
Deepak Ballani, Director General of Isma, highlighted the immediate need for action. "There is sufficient ground for an MSP revision this year. Cane arrears are already building up. As per reports, cane arrears in Maharashtra as of 30 November stand at ₹2,000 crore," he said. He also noted that sugar prices have recently fallen below the cost of production.
Supporting the revision, former Isma president Gautam Goel pointed out that sugar has a low weight in the Consumer Price Index (CPI) basket, meaning an MSP increase would not impose a significant fiscal burden on the government.
Compounding the issue is a softening domestic demand. Consumption in the 2024-25 season is estimated at 28.1 million tonnes, down from 29 million tonnes the previous year. An Isma study projects a mere 1.5-2.0% annual growth in demand over the next five years, keeping the outlook subdued.
This muted growth, with 60-65% of demand coming from institutional sources, continues to pressure ex-mill prices and strain the financial health of the entire sugar industry.
