The average sugar recovery rate declined from 10.10 per cent to 9.30 per cent, marking a drop of 0.80 percentage points, which further deepened the production deficit

India’s sugar production has witnessed a sharp 18 per cent decline in the 2024–25 sugar season, falling to 257.40 lakh metric tonnes (LMT) from 315.40 LMT in the previous year, according to data from the National Federation of Cooperative Sugar Factories (NFCSF). The shortfall of 58 LMT is primarily due to reduced availability of sugarcane, lower sugar recovery rates, and regional challenges such as red rot disease affecting crops in Uttar Pradesh and a delayed monsoon in Maharashtra and Karnataka.

Sugarcane crushing operations also declined, dropping 11 per cent from 3,122.61 LMT in 2023–24 to 2,767.75 LMT this season. Additionally, the average sugar recovery rate saw a dip from 10.10 per cent to 9.30 per cent, a reduction of 0.80 percentage points, which further worsened the production deficit.

Meanwhile, the Central Government has announced the Fair and Remunerative Price (FRP) for sugarcane for the upcoming 2025–26 season (October–September) at Rs 355 per quintal, based on a basic recovery rate of 10.25 per cent. However, with the national average recovery now at 9.30 per cent, most sugarcane farmers are unlikely to qualify for the full FRP, which could result in lower-than-expected earnings.

The sharp drop in India’s sugar production for the 2024–25 season was largely driven by declines in the top sugar-producing states — Maharashtra, Uttar Pradesh, and Karnataka.

In Maharashtra, sugar output fell by 19.50 LMT, reaching 80.95 LMT, primarily due to reduced cane yields and a dip in the sugar recovery rate to 9.1 per cent. Uttar Pradesh saw its production fall by around 13.90 LMT, down to 72.40 LMT, with the impact of red rot disease and a recovery rate of 9.4 per cent contributing to the decline. In Karnataka, production dropped by 11 LMT to 40.40 LMT, as erratic rainfall adversely affected crop health and brought the recovery rate down to 9.0 per cent.

On the other hand, Gujarat reported a steady recovery rate of 10.30 per cent, producing 14.50 LMT of sugar, while Uttarakhand saw a slight improvement in recovery to 8.9 per cent, yielding 4.20 LMT.

However, states like Tamil Nadu (3.50 LMT), Bihar (2.80 LMT), and Andhra Pradesh (2.20 LMT) experienced sharper production drops, largely due to limited sugarcane availability.

India is projected to close the 2024–25 sugar season with a net production of 259 lakh metric tonnes (LMT), after accounting for 32 LMT diverted toward ethanol production. The country is expected to maintain closing stock levels of 48–50 LMT, which should be sufficient to meet domestic demand of around 24 LMT per month during October and November 2025.

Looking ahead, the National Federation of Cooperative Sugar Factories (NFCSF) anticipates a recovery in sugar production for the 2025–26 season, driven by a favourable monsoon in 2024 and increased sugarcane sowing in key states. Maharashtra has reported a 10 per cent rise in cane acreage, while Karnataka has seen an 8 per cent increase. Based on these developments, the NFCSF estimates production could rise to 280–290 LMT in the next season.

Ethanol-linked sugar diversion for the 2024–25 season reached 32 lakh metric tonnes (LMT), falling short of the government’s target of 35 LMT. The shortfall is attributed to stagnant ethanol procurement prices — Rs 73.14 per litre for juice-based ethanol and Rs 67.70 per litre for B-heavy molasses — which made ethanol production less attractive for sugar mills.

As a result, several mills opted to divert less cane for ethanol and instead produced an additional 3 LMT of sugar, capitalizing on the higher profitability of sugar sales in the current market conditions.

Ex-mill sugar prices have remained stable, currently estimated between Rs 3,850 and Rs 3,900 per quintal, bolstered by the Centre’s approval for 10 lakh metric tonnes (LMT) of sugar exports. This move has helped sustain domestic price levels despite a production drop.

On the financial front, sugar mills have shown significant progress in clearing cane payments. Within six months, they have disbursed Rs 91,000 crore, covering approximately 90 per cent of the Rs 1.01 lakh crore owed to farmers, thereby improving liquidity and easing financial pressure on the sector. To help the sugar industry navigate ongoing challenges, the National Federation of Cooperative Sugar Factories (NFCSF) has urged the Central Government to implement several key policy measures such as raising the Minimum Selling Price (MSP) of sugar to Rs 40 per kilogram, citing that the current production cost stands at Rs 41.66/kg, leaving mills under financial strain; setting a higher ethanol diversion target of 50 lakh metric tonnes (LMT) for the 2025–26 season, aligning with broader goals of boosting biofuel production and reducing surplus sugar; revising ethanol procurement prices, particularly for juice-based and B-heavy molasses-based ethanol, to make ethanol production more viable and attractive for mills and maintaining a stable and forward-looking export policy, especially to support port-based states and ensure domestic price stability, even in years of fluctuating production.