India to tackle sugar surplus with higher exports, ethanol diversion

NEW DELHI: India aims to shield sugarcane farmers from income losses by managing surplus supplies through exports and diverting more sugar for ethanol production, a senior government official said on Thursday.

Higher exports from the world’s second-largest sugar producer could pressure benchmark New York and London futures ,, which are hovering near five-year lows.

“The surplus is going to hurt the farmers, which we cannot afford to do. So, in their interest, and also in the interest of all the stakeholders, you need to ensure that the surplus stocks are contained,” India’s food secretary Sanjeev Chopra told reporters.

The government will try to contain the sugar surplus through all possible measures, he said.

India’s sugar production in the 2025/26 marketing year, which began on October 1, is projected to rise 18% to 30.9 million metric tons, even after diverting 3.4 million tons for ethanol production, Chopra said.

India allows 1.5mn ton sugar exports on higher domestic surplus

Domestic demand in the world’s largest sugar consumer comes up to around 29 million tonnes annually. With output set to exceed consumption, New Delhi last month approved exports of 1.5 million tons in the current season.

India was the world’s second-largest sugar exporter in the five years to 2022/23, with shipments averaging 6.8 million tons annually. But a drought led the government to ban sugar exports in 2023/24, and it allowed only 1 million tons to be shipped overseas last year.

The sugar industry expects that by mid-January, when a glut in supplies is anticipated, prices will gradually decline, posing challenges for the sector, Chopra said.

“We have taken that into account. In the next month or so we will come out with certain decisions, which would assist the industry and ensure the timely payment to farmers,” he said.

Sugar prices have already begun to fall, down nearly 4% since the start of the marketing year on October 1.

Raising the floor price for sugar sales in India’s domestic market is another measure that is being considered, the food secretary said.