Sugar mills are shutting down before time due to shortage of sugarcane

12-Feb-2025 01:27 PM

The situation with sugar mills shutting down ahead of schedule is indeed concerning for both the domestic market and global sugar prices.

The primary factors contributing to this issue include the weather patterns and pest infestations affecting sugarcane crops, as well as the low recovery rate of sugar from the cane.

These challenges have caused sugarcane availability to dwindle, forcing mills to halt their operations earlier than expected.

The government's permission to export 10 lakh tonnes of sugar further complicates the situation, as the high demand and slow pace of agreements for export at elevated prices could push global prices up.

Additionally, sugar mills in Maharashtra, Karnataka, and Uttar Pradesh are experiencing difficulties sourcing enough raw material, with many units operating at half their capacity and a few even being forced to close by the end of February.

The resulting drop in domestic production is significant, with the Indian Sugar Mills Association (ISMA) forecasting a reduction in sugar production to 272.7 lakh tonnes for the 2024-25 marketing season, while other trade organizations estimate a slightly lower figure. This decline could further drive up sugar prices in both domestic and international markets.

It's also worth noting the impact on local economies where these mills operate. The closure of mills could have a ripple effect on employment, sugarcane farmers, and the broader agricultural economy.