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Senior Scientific Officer/Head (Chemistry), UP Council of Sugarcane Research, Shahjahanpur (UP)
Sugar prices should not be analysed through a single variable, neither ethanol, nor production, nor stock-holding behaviour, nor festival demand. A robust system needs an integrated, periodically updated balance sheet encompassing cane acreage, productivity, disease and weather losses, cane utilisation, mill drawl, recovery, alternative cane uses, ethanol diversion, imports/exports, consumption and physical stocks.
The recent rise in sugar prices in India has triggered a familiar question: Is diversion of sugarcane towards ethanol responsible for this? The more pertinent question, however, would be whether India is reconciling its entire sugarcane-to-sugar balance correctly.
The Government has now estimated sugar production for the current season at around 306 lakh metric tonne (LMT), against an initial estimate of about 343 LMT made by sugarcane-growing States.
The lower output has been associated with factors including crop diseases and weather-related damage. At the same time, demand normally increases during the festive period. The Government has also stated that adequate sugar stocks are available to meet domestic requirements until the beginning of the new crushing season.
This brings up a more fundamental question: how accurately is the country’s cane-to-sugar mass balance being estimated? A production forecast normally begins with acreage, expected cane productivity and anticipated sugar recovery. But the harvested cane does not necessarily move entirely into the sugar-mill stream. Cane is also used for seed, chewing, jaggery, khandsari and other local uses.
In addition, field losses, transport losses, pest and disease damage, waterlogging, drought or other abiotic stresses can alter the final quantity and quality reaching the mill.
Therefore, when a projected cane production figure does not translate into the expected sugar output, the scientific exercise should not stop at identifying one possible cause. The entire chain needs to be reconciled to provide a clear picture of the sugar balance, starting with estimated acreage and actual cane availability, followed by cane utilisation/drawl and recovery rates, leading to sugar production, while accounting for ethanol diversion and other uses, and ultimately reconciling these figures with domestic consumption, exports, imports and physical stocks.
This is where the current emphasis on physical verification of sugar stocks becomes significant. Reported stock, sold stock, lifted stock, and physically available stock are not necessarily identical at any given time. The Government has recently introduced stock-holding restrictions and physical verification measures amid concerns about market behaviour and unusual price movement. In Uttar Pradesh, directions have specifically been issued for regular physical verification of mill stocks, monitoring of reported stock and sale data, and verification of actual sugar movement. Such verification is important not because reported data should be presumed incorrect, but because different stages of the supply chain need to be reconciled.
Where, then, does ethanol fit into this picture?
Ethanol is certainly a component of the sugar balance and cannot be ignored. However, current data do not support treating it as the sole explanation for the price increase. The Ministry of Consumer Affairs, Food & Public Distribution, Government of India has reported that the share of sugar diverted towards ethanol has declined from around 12% in 2022-23 to around 9% in 2025-26. It has also been stated that nearly three-fourths of ethanol production now comes from grain-based feedstocks, particularly maize.
At the same time, ethanol diversion does have an important policy dimension. If a significant diversion has been planned on the basis of an expected sugar production level, and subsequent crop or production estimates deteriorate materially, there should be sufficient flexibility to reassess the balance between sugar and ethanol. This need not be viewed as a choice between food and fuel. Rather, it is a question of dynamic allocation based on the prevailing sugar balance.
The other side of the equation must also be recognised. The ethanol programme has created substantial processing capacity and provided sugar mills with an additional revenue stream, which has contributed to improved financial health and farmer payments. According to the Government, 97% of sugarcane dues for the 2025-26 season had been paid by 20 August 2026.
Any future adjustment therefore needs to consider not only sugar availability but also the investments already made in ethanol infrastructure and the role of ethanol in strengthening mill liquidity.
The present episode therefore offers a larger lesson. Sugar prices should not be analysed through a single variable, neither ethanol, nor production, nor stock-holding behaviour, nor festival demand. A robust system needs an integrated, periodically updated balance sheet encompassing cane acreage, productivity, disease and weather losses, cane utilisation, mill drawl, recovery, alternative cane uses, ethanol diversion, imports/exports, consumption and physical stocks.
For a crop as economically important as sugarcane, better data reconciliation may be as important as better policy intervention. Sugar is also a widely consumed food commodity, so abrupt price movements can affect households and food-processing businesses, while depressed prices can weaken the economics of cane cultivation. The objective is therefore not simply a lower price, but a stable and transparent price environment.
The objective should be a balance that protects consumer affordability, supports remunerative returns to farmers, keeps mills financially viable and allows ethanol to remain a useful diversification pathway without compromising domestic sugar availability. The immediate price movement may be temporary. The need for a more scientifically reconciled sugar balance is not.
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