Polls, heat wave drive India’s sugar offtake set to record 29 million tonnes

Sugar consumption during the current season (October-September) is set to cross 29 million tonnes (mt), a record high and up 4 per cent from about 28 mt in the 2022-23 season. While industry insiders attributed the increase to higher demand amid the election campaign and an unprecedented heat wave across the country, officials see the rise as normal growth due to changing food habits and higher income.

The Food Ministry on Tuesday announced the domestic sales sugar quota for mills for June at 2.55 mt, taking the total to 22.1 mt since October 2023 in the 2023-24 season. If an average 2.4 mt per month sugar quota is released for the next quarter (July-September), the total allocation may rise to 29.3 mt for the whole year.

Every month, the Food Ministry decides the sugar sales quota under a formula based on previous production and sales records, and it also allocates the quantity that each mill is supposed to sell. Any unsold quantity is added to the next-month quota if there are valid reasons for a mill not being able to sell the allotted quantity in a month.

Household offtake up

Trade and industry officials said there is higher demand due to the election campaign as both tea and cold drinks are offered to people during meetings and rallies. Besides, there is also an increase in household consumption due to the heat wave, the officials added.

“This month (May) witnessed the highest ever demand and supply in India — a 2.7 mt quota — and almost nothing is left for sale. Heatwave resulted in more consumption of lime water by people below the poverty line as well as middle- and high-income groups, boosting consumption of ice- cream, soft drinks, and hard drinks,” said Praful Jagjivandas Vithalani, founder chairman of the All India Sugar Trade Association (AISTA).

He further said Parliament election campaigning as well as gathering at nukkads increased consumption of tea, coffee, etc. Since international prices were high, there are some incidents of leakage to border countries such as Nepal and Bangladesh, he said.

Production target

On the other hand, a senior official said t earlier the consumption estimate was not reflecting the allocation, which used to be lower, whereas in the last 2-3 years it is more realistic. Even sugar mill owners realise that the allotted quantity is as per demand, the official said.

Meanwhile, the Agriculture Ministry has set a target of 470 mt of sugarcane production during the 2024–25 crop year (July-June). Even if the target is achieved, it may lower the sugar production in the next season to about 31 mt from the current year’s estimated 32 mt due to a higher commitment for ethanol.

Against a diversion of about 4 mt of sucrose for ethanol in the 2022–23 season, it may be around 2-2.5 mt in the current season. The government had earlier fixed 1.7 mt of sugar equivalent for ethanol, which was later supplemented with some unspecified quantity. However, the ethanol blending with petrol (EBP) rate has been fixed higher at 15 per cent for the current year after achieving 12 per cent in the 2022–23 ethanol supply year. But the government wants to achieve 20 per cent EBP during 2024–25, which needs more quantity of sugarcane for ethanol.

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