The future of sugar is in the hands of the government

03-Jan-2025 10:50 AM

The future of sugar is in the hands of the government
According to ISMA and NFCSF, this year’s sugar production is expected to be weaker than last year. Ethanol consumption of sugar may also increase.
Production has decreased in various states due to different factors. Uttar Pradesh faced crop disease, while Maharashtra and Karnataka experienced losses due to rainfall.
ISMA will release a crop report at the end of January, and I Grains India believes production may be further reduced.
ISMA has requested the food ministry to allow the export of at least 2 million tons of sugar, as the old stock is in good condition.
Imports have been requested based on old stock, but sugar is increasingly being used in ethanol production as well.
While production is expected to decrease, and ethanol consumption rises, it is uncertain whether the government will take the risk of opening exports.
The government may prefer to use excess stock for ethanol production, helping the blending program succeed.
As production declines, the sales quota has been gradually reduced over the past three months.
Initially, the sugar market was entirely dependent on monthly quotas, but now decisions are also influenced by export policies.
I Grains India believes the chance of export being opened is low; if it happens, only 500,000 to 800,000 tons may be allowed.
The government has managed to keep sugar prices stable and would prefer them to remain under control.
The sugar industry is unique in that the government controls the FRP of sugarcane, sugar prices, molasses prices, ethanol prices, and the prices of other by-products. Mills only convert sugarcane into sugar for sale.
Despite this regulation, the government has also supported mills through the ethanol program, which has improved financial conditions for many mills due to timely sugarcane payments and ethanol blending.