Sugar prices remain high despite a fourfold rise in production

Sugar prices are refusing to budge from their record highs even as production has risen to nearly four times of what it was at the same time last year.

According to data released by the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), sugar production in India reached 1.285 million tonnes as of November 5, while it was 320,000 tonnes during the corresponding period last year. The increase in production is being attributed to more mills beginning crushing operations earlier this season to increase availability during the festive period.

However, domestic sugar prices continued to remain elevated, with the average modal retail price at ₹60 per kg on Monday, up 36% from ₹44 per kg a year ago. The average modal price was also higher than the ₹55 per kg recorded a month ago, according to data from the Department of Consumer Affairs (DOCA).

Maharashtra drives the production rise

According to the ISMA release, 184 sugar mills had commenced crushing operations across the country as of November 5, compared with 154 mills during the same period last year. The higher early-season production has been driven largely by Maharashtra, where crushing operations began earlier than last year.

Maharashtra accounted for 1.078 million tonnes of sugar production, with 136 mills operational as of November 5, compared with 123,000 tonnes produced by 101 mills during the corresponding period last year.

In Uttar Pradesh, 19 mills have started crushing operations in western and central regions, producing 20,000 tonnes of sugar. Most of the remaining mills in western Uttar Pradesh are expected to begin operations over the next few days, while factories in central Uttar Pradesh are likely to start after the Diwali festivities.

In Karnataka, seven mills continuing operations from the special season have produced 90,000 tonnes of sugar. The state's main-season crushing is expected to begin shortly following the resolution of farmer-related issues. Seven mills in Tamil Nadu have produced 64,000 tonnes, while 12 mills in Gujarat and three in Telangana have also started operations.

ISMA says in ‘comfortable position’

ISMA Director General Deepak Ballani said the industry was in a comfortable position to meet domestic demand, with around 3.6 million tonnes of carryover stocks from the previous season and fresh production gathering pace.

"The country is in a comfortable position to meet its domestic sugar requirements," Ballani said, adding that production would increase substantially in the coming weeks as more mills begin operations in Uttar Pradesh and Karnataka.

ISMA said the combination of carryover stocks and higher early-season production would ensure adequate supplies for domestic consumption.

However, the increase in production at the start of the season has not yet translated into lower retail prices. The average modal price of ₹60 per kg on Monday was ₹5 higher than a month ago and ₹16 higher than a year earlier, indicating that sugar prices remain elevated despite expectations of improved availability.