The decline in sugar production in India is attributed to a combination of factors affecting both the agricultural and industrial sectors. Here are the key reasons contributing to this trend:
Reduced Sugarcane Crushing: A significant reduction in the number of sugar mills operating, particularly in major producing states like Maharashtra, Karnataka, and Tamil Nadu, has led to lower sugarcane crushing activity. Many mills have either not started crushing or have reduced their operations, which directly impacts the overall sugar output.
Shift Toward Ethanol Production: Sugar millers are prioritizing the production of ethanol over sugar. This shift is primarily due to the reduced likelihood of government approvals for sugar exports and the delayed decision on increasing the minimum selling price (MSP) of sugar. Ethanol production offers a more profitable alternative, and in the current season, the quantity of sugar used for ethanol production is expected to double compared to the previous season. In 2023-24, about 21.5 lakh tonnes of sugar were used for ethanol, while this number is projected to rise to around 40 lakh tonnes in 2024-25.
Decline in Sugarcane Availability: There is a forecasted reduction in the sugarcane crop this season, which will impact the availability of raw material for sugar production. With more sugarcane being diverted to ethanol production, the amount of sugarcane available for sugar production is expected to decrease significantly.
Reduced Number of Active Mills: By the end of December 2024, only 493 sugar mills were operational, down from 512 mills in the previous year. This further compounds the reduction in sugar production.
As a result, the industry faces a bleak outlook for the current marketing season, with a decrease in both sugarcane availability and the number of mills processing the cane, leading to a notable decline in sugar output.