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Agriculture
Sugar prices surge as ethanol diversion ruled out as cause
✍️ The Indian Express
🗓 22 Aug 2026, 08:15 AM
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Analysts say the recent spike in sugar prices is driven by supply‑side constraints, not the diversion of sugar for ethanol production.
India’s retail sugar price has climbed sharply in recent weeks, prompting public debate over the factors behind the rise. While some commentators have pointed to the diversion of sugar to ethanol production as a primary driver, industry experts and government sources contend that the diversion accounts for only a marginal share of the overall supply.
According to the Ministry of Consumer Affairs, the current price surge reflects a combination of lower domestic cane output, higher demand from confectionery and beverage sectors, and tighter global market conditions. The ethanol programme, which channels a portion of the sugarcane crush into fuel, is limited in scale and does not significantly dent the quantity of sugar available for the market.
Economists warn that unless the shortfall in cane procurement is addressed, sugar prices may remain elevated. They recommend measures such as improving crop forecasting, enhancing storage capacity, and reviewing export policies to stabilise the market.
According to the Ministry of Consumer Affairs, the current price surge reflects a combination of lower domestic cane output, higher demand from confectionery and beverage sectors, and tighter global market conditions. The ethanol programme, which channels a portion of the sugarcane crush into fuel, is limited in scale and does not significantly dent the quantity of sugar available for the market.
Economists warn that unless the shortfall in cane procurement is addressed, sugar prices may remain elevated. They recommend measures such as improving crop forecasting, enhancing storage capacity, and reviewing export policies to stabilise the market.