India has produced a record amount of sugarcane this season, but consumers are facing a surprising problem: sugar prices are rising sharply.
Retail sugar prices, which were around Rs 48 per kg in July, have climbed to about Rs 55.70 per kg nationally and crossed Rs 65 per kg in some markets. With Ganesh Chaturthi, Dussehra and Diwali approaching, the increase could put further pressure on household budgets.
So, how can sugar become expensive when India has produced so much sugarcane?
The answer lies in a simple but important difference: more sugarcane does not always mean more sugar.
Record Sugarcane Production, But Less Sugar
India’s third advance estimate put sugarcane production for the 2025-26 season at around 5,000.63 lakh tonnes.
That sounds like good news for sugar supplies. But sugar mills do not convert every kilogram of sugarcane into the same amount of sugar.
What matters is the sugar recovery rate — the amount of sugar that mills can extract from the cane.
For example, if the recovery rate is 10%, roughly 10 kg of sugar can be obtained from 100 kg of sugarcane.
This season, India’s average recovery rate reportedly dropped from around 9.70% to 8.91%.
That small-looking decline becomes significant when calculated across millions of tonnes of sugarcane.
As a result, the initial estimate of around 343 lakh metric tonnes (LMT) of sugar production has fallen to approximately 306 LMT.
What Damaged The Sugarcane Crop?
Two major problems affected the crop — Red Rot disease and Top Borer infestation.
Red Rot is a fungal disease that damages sugarcane internally and can reduce its sugar content. Top Borer is an insect pest that attacks the upper portion of the plant.
Excess rainfall and waterlogging also affected sugarcane-growing regions.
Field surveys conducted between December 2025 and February 2026 had already detected Red Rot in several important sugar-producing areas.
The problem, therefore, was not simply that India did not have enough sugarcane. The bigger issue was that the cane was producing less sugar than expected.
Did Sugar Exports Make The Problem Worse?
Exports are another part of the story.
In November 2025, the government allowed sugar mills to export around 15 lakh tonnes. The quota was later increased to 20 lakh tonnes because authorities expected domestic production and stocks to remain comfortable.
However, only around 8 lakh tonnes were eventually exported before restrictions were imposed.
This means exports alone cannot explain the current price rise.
But the export decisions were made when the production outlook appeared much stronger. As the season progressed and sugar production estimates weakened, the government had to change its approach.
By May, authorities moved to restrict exports in an effort to protect domestic supplies.
Is Ethanol Responsible For Expensive Sugar?
Ethanol has also become part of the debate.
Sugar mills can use sugarcane and other cane-based products to produce ethanol instead of sugar. India has been increasing ethanol blending in petrol as part of its energy policy.
This has led to questions over whether too much sugarcane was diverted towards ethanol.
However, the government has rejected this explanation for the current price surge.
According to the government’s data, the share of sugar diverted towards ethanol declined from around 12% in 2022-23 to approximately 9% in 2025-26. At the same time, nearly three-fourths of India’s ethanol production now comes from grains, particularly maize.
So, ethanol may affect the broader sugar market, but the government says it is not the main reason behind the latest price increase.
Why Are Sugar Prices Rising So Fast?
There are several factors working together.
First, actual sugar production is lower than initially expected.
Second, the market began anticipating tighter supplies as the crushing season progressed.
Third, demand typically rises during India’s festive season, when households and businesses use more sugar for sweets and other preparations.
The government has also raised concerns about speculation and hoarding.
Authorities have conducted inspections and introduced tighter stockholding restrictions to prevent excessive accumulation of sugar by traders and other market participants.
Why Is India Importing Sugar Now?
The situation has forced the government to take an unusual step.
India has allowed duty-free imports of up to 10 lakh tonnes of raw sugar until October 31 to increase domestic availability and control prices.
This is significant because India had earlier allowed exports when supplies appeared comfortable.
Now, the country is moving in the opposite direction — from exporting sugar to importing it.
The imported raw sugar can be processed by refineries and supplied to the domestic market. However, the arrival of large overseas shipments could take time.
What Does This Mean For Consumers?
The impact is already visible.
According to government data, the average retail price of sugar increased from around Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20.
Prices in some markets have crossed Rs 65 per kg.
The timing is particularly important because the festive season is approaching. Higher demand for sweets during Ganesh Chaturthi, Dussehra and Diwali could put additional pressure on prices if supplies remain tight.
The government is therefore trying to increase availability through imports, restrict excessive stockpiling and prevent further price escalation.
The Simple Explanation
The current sugar problem can be understood in one line:
India produced plenty of sugarcane, but the cane produced less sugar than expected.
The initial calculations were based on a much higher sugar output. When crop diseases, lower recovery and weather-related problems reduced actual production, the supply outlook changed.
By then, export decisions had already been made, the crushing season was nearing its end and festive demand was approaching.
That combination has created the current squeeze.
So, the record sugarcane production figure does not necessarily mean sugar should be cheap. What matters is how much usable sugar mills can actually extract from that cane — and this season, that number has fallen significantly.
