Sugar prices are climbing rapidly across Kerala, adding fresh pressure to household budgets. In just one month, wholesale prices have jumped by around ₹520 per quintal, while retail prices have risen by nearly ₹7 per kilogram, signalling a tightening supply situation that could continue in the coming weeks.
The sharp increase is being driven by a combination of domestic policy changes and weather-related challenges. One of the biggest factors is India’s expanding E20 fuel programme, which blends 20% ethanol with petrol. As more sugar mills divert sugarcane and cane juice towards ethanol production, less raw material is available for sugar manufacturing, reducing overall supply in the market.
Weather has added to the problem. Maharashtra, India’s largest sugar-producing state and a major supplier to Kerala, has experienced delayed monsoon rains and unfavourable climatic conditions, affecting sugarcane cultivation. Industry estimates now suggest that India’s sugar production could fall to around 27.9 million tonnes, below the country’s annual consumption of approximately 28.5 million tonnes.
With production expected to trail demand, traders believe sugar inventories could fall to one of their lowest levels in decades by the beginning of the next crushing season. This has increased concerns that prices may remain elevated unless supply conditions improve.
To stabilise the domestic market, the Central Government has extended restrictions on sugar exports until September 30. While the move is intended to ensure adequate availability within India, lower production and continued diversion towards ethanol are keeping upward pressure on prices. India’s reduced presence in the global export market is also influencing international sugar prices, with countries such as Brazil and Thailand expected to play a larger role in meeting global demand.
For consumers and food businesses alike, the coming months may bring further price volatility as the market balances clean-energy ambitions with food supply requirements.
