Sugar Industry Denies Shortage, Blames ‘Speculative Behavior’ for 29% Price Surge

NEW DELHI: India’s sugar industry is pushing back against concerns of a supply crisis, asserting that the recent, sharp climb in market prices is driven by artificial factors rather than an actual deficit of the sweetener.

Niraj Shirgaokar, president of the Indian Sugar & Bio-Energy Manufacturers Association (ISMA), addressed the media on Monday to clarify that the current 29% surge in retail prices—which have spiked from ₹48.7 per kg to ₹63 per kg in just one month—is the result of “speculative behavior” and aggressive stockpiling by bulk consumers.

Manufactured Scarcity

According to ISMA, the panic in the market began when a segment of traders created a misleading narrative regarding supply tightness. This prompted large-scale industrial buyers, who typically operate on a “just-in-time” inventory model, to secure 1.5 to 2 months of supply in advance.

“That behavior pulled sugar out of circulation and into godowns, creating artificial tightness that had nothing to do with actual availability,” Shirgaokar explained. He emphasized that the industry is firmly in favor of the “rationalization” of retail prices and expects to see a cooling-off period as recent government interventions take effect.

Ethanol Diversion Not to Blame

The industry body also sought to debunk claims that the diversion of sugar for ethanol production is tightening the domestic supply. ISMA clarified that out of the 1,200 crore liters of ethanol produced in the current supply year (October 2025–September 2026), only 290 crore liters were derived from sugar.

“Only after ensuring availability for domestic consumers and maintaining adequate opening stocks is the allocation for ethanol diversion decided,” the organization stated, reiterating that national food security remains the primary priority.

A Roadmap for Stabilization

While acknowledging that production has been impacted by weather conditions, pest infestations, and slightly lower-than-estimated crop yields, ISMA maintains that the country has a “healthy buffer.”

Looking ahead, the association projects a closing stock of approximately 35 lakh tonnes by the end of September. To further stabilize the market, the industry is banking on a multi-pronged approach currently being implemented by the government, including:

• Duty-free imports to supplement domestic availability.
• Tighter stockholding limits to prevent hoarding.
• Extended crushing operations and an early start to the upcoming season.

When asked whether individual mills might be contributing to the price hikes by holding back stock, the ISMA president did not rule out the possibility, noting that the government is currently investigating such practices. However, he maintained that the industry as a whole is not responsible for the volatility.

As the market continues to grapple with the recent sugar price hike, ex-mill rates—which had peaked at ₹58–59 per kg—have already begun to trend downward. Industry experts anticipate that these reduced wholesale prices will reflect in the retail sector in the coming days, providing much-needed relief to consumers.