Sugar output to fall 11%, government blames disease and rain

India's sugar production for the current season is projected at 306 lakh tonnes, 11% lower than the initial estimate of 343 lakh tonnes, the government said on Friday. The decline is attributed to Red Rot and Top Borer disease in sugarcane and waterlogging from excess rainfall. The government said adequate stocks are available to meet domestic demand until the new crushing season begins in October.

Retail sugar prices have risen sharply from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20, with some reports putting the all-India modal price at Rs 65 per kg by late August. The government rejected claims that ethanol diversion is the cause, noting the share of sugar diverted for ethanol has declined to 9%. It instead blamed lower domestic production, festive demand, weather damage, tight global supplies, and hoarding by some industry players. International sugar prices rose 16% in the same period.

To control prices, the government has imposed a stock limit of 400 tonnes on dealers, banned exports until September 30, and permitted duty-free import of 10 lakh tonnes of raw sugar. States and mills have been advised to begin crushing from October 15, which is expected to raise October output to over 10 lakh tonnes. Joint central-state teams are verifying mill stocks to check hoarding.