SEEKING SWEETER RELIEF

Higher production eases sugar worries, but industry eyes relaxed ethanol curbs to fuel future growth

Sugar production in the country for the ongoing marketing year (October-September) is expected to be higher than earlier estimates. This development is viewed as a positive for the domestic sugar industry. Increased sugar supply should allow the government to lift curbs on ethanol production that were implemented in December.

Lower supply in the system served as the harbinger of higher retail prices for sugar. In anticipation of lower sugar supply, the government decided to prioritize consumers over the industry in recent months. This was evident as it banned sugar exports since May last year and later imposed restrictions on sugar diversion for ethanol production.

On 7th December, the government issued a notification instructing sugar mills not to utilize sugarcane juice and sugar syrup for ethanol production in the ongoing ethanol supply year (ESY) 2023-2024. ESY spans from November to October. However, a week later, the government relaxed the restriction, permitting the diversion of sugarcane juice and syrup for ethanol production, albeit with an overall diversion cap set at only 1.7 million tonnes. Given that it’s an election year, it was expected that the government would take measures to ensure that consumers do not feel the pain of rising sugar prices.

Now, as sugar production is likely to be higher, the industry is hoping that the government will reverse some of its restrictive measures. The industry body, Indian Sugar Mills Association (ISMA), which had earlier projected sugar production to be around 33 million tonnes for the October ’23 to September ’24 season, has now revised its estimate to 34 million tonnes.