The National Federation of Cooperative Sugar Factories Ltd (NFCSF) has urged the Government of India to take timely policy measures to address the emerging surplus in sugar production during the current sugar season. The federation has called for higher sugar export allocations and enhanced diversion of sugar towards ethanol production to maintain market balance and ensure the financial stability of cooperative sugar mills.
NFCSF noted that sugar production this season is expected to be higher due to favorable climatic conditions, steady availability of sugarcane, and improved recovery rates in major producing regions. While domestic consumption remains stable, restricted exports and lower-than-expected diversion to ethanol have resulted in the accumulation of excess sugar stocks, raising concerns over price stability and liquidity for mills.
The federation emphasised that the existing export permissions are inadequate to manage the surplus effectively. NFCSF believes that current stock levels provide sufficient comfort to permit additional sugar exports without impacting domestic availability or consumer prices. Allowing higher export volumes would help mills reduce excess inventory, lower carrying costs, and improve cash flows, enabling timely payments to sugarcane farmers.
“Exports are a vital instrument for balancing the domestic sugar market, especially during periods of surplus production,” NFCSF said in a statement. “Timely and adequate export permissions will help cooperative sugar mills remain financially viable and ensure that farmer payments are not adversely affected.”
In addition to exports, NFCSF has strongly advocated for greater diversion of sugar towards ethanol production under the national ethanol blending programme. Ethanol production from sugarcane juice, syrup, and B-heavy molasses provides an effective mechanism to absorb surplus sugar while supporting India’s renewable energy and fuel security objectives.
However, the federation expressed concern that ethanol diversion has not reached its full potential due to economic constraints. NFCSF pointed out that current ethanol procurement prices, particularly for ethanol produced from sugarcane juice and syrup, do not adequately compensate mills for the opportunity cost of diverting sugar from the domestic market. As a result, mills are hesitant to scale up diversion despite having the necessary infrastructure and capacity.
NFCSF has therefore urged the government to review and rationalise ethanol pricing to make diversion economically attractive. A revised pricing framework, the federation said, would incentivise mills to increase ethanol production, reduce sugar inventories, and improve overall efficiency within the sugar-ethanol value chain. Higher ethanol realisation would also strengthen the financial position of mills and support timely payments to farmers.
The federation further highlighted the need for policy clarity and predictability. Delays in announcing export quotas or ethanol pricing revisions create uncertainty for sugar mills, affecting operational planning, inventory management, and investment decisions. NFCSF has requested that key policy decisions be communicated well in advance to enable mills to align their production and marketing strategies accordingly.
NFCSF also underscored the broader importance of the cooperative sugar sector in supporting rural livelihoods and economic development. Cooperative sugar mills play a critical role in providing stable incomes to millions of sugarcane farmers and generating employment in rural areas. Policy measures that support mill viability, the federation said, have a direct and positive impact on the rural economy.
Calling for a long-term and integrated policy framework, NFCSF reiterated the need to align sugar production management with export policy and ethanol blending targets. Such an approach would help address cyclical volatility in the sugar sector, enhance farmer income stability, and ensure sustainable growth of the industry.
In conclusion, NFCSF stated that a balanced combination of higher sugar exports and increased ethanol diversion is essential to manage surplus production effectively. The federation expressed confidence that proactive policy support will strengthen the sugar industry, advance India’s renewable energy goals, and protect the interests of sugarcane farmers.
