Sugar Prices Surge 20% in August: Is ethanol taking a bite out of supplies?

Mangalore Today News Network

New Delhi, Aug 23, 2026: Sugar prices in India have surged sharply in recent months, rising nearly 20% in August amid tighter supplies and growing festival-season demand.

According to Consumer Affairs Department data, retail sugar prices stood at ₹55.70 per kg on August 20, compared with ₹48.18 a month earlier and ₹46.30 on August 20, 2025.

The price rise comes ahead of the festival season, when demand for sugar typically increases due to higher consumption of sweets and other products.

Ethanol adds to the supply challenge
The growing use of sugarcane and its by-products for ethanol production has added another dimension to the sugar supply situation. Sugar mills can divert part of their cane or sugar output towards ethanol, which is blended with petrol under the government’s fuel policy.

While ethanol production helps reduce India’s dependence on imported crude oil and provides an additional revenue stream for sugar mills, it also affects the quantity of sugar available for domestic consumption.

Weather, not acreage, behind production concerns
Government data indicate that sugarcane acreage has not declined significantly. The area under cultivation this year is almost similar to last year and around four lakh hectares above the five-year average.

However, weaker monsoon conditions and the impact of El Nino have raised concerns over crop yields and sugar production.

India, the world’s second-largest sugar producer after Brazil, has 703 sugar mills, including 335 private, 325 cooperative and 43 government-run mills.

Ketan Patel, vice-president of the National Federation of Cooperative Sugar Factories Ltd, said the industry had initially projected sugar production for the 2025-26 season at 3.2 crore tonnes, but actual output was around 3 crore tonnes, leaving a shortfall of about 20 lakh tonnes.

Centre moves to contain prices
With domestic supplies tightening, the Centre has taken measures to prevent further price increases ahead of the festival season. These include restricting sugar exports and imposing stock limits on wholesalers.

The measures are aimed at ensuring adequate domestic availability and preventing excessive stockpiling.

The sharp rise in prices has highlighted the challenge of balancing sugar availability with the government’s push for ethanol production. With lower-than-expected sugar output and rising festive demand, the coming months will test the industry’s ability to maintain sufficient domestic supplies while meeting ethanol-blending requirements.