Of the 536 sugar mills that began crushing operations this season, 248 had stopped operations by the end of February. In comparison, only 186 mills had closed by the same time last year. Industry observers say the main reason for the premature closure is the reduced availability of sugarcane, which has made it difficult for mills to continue crushing.
India’s sugar industry, which sustains the livelihood of millions of sugarcane farmers, is facing increasing challenges as falling sugarcane yields disrupt mill operations across the country. A sharp decline in sugarcane production has led to early closure of 248 sugar mills by the end of February in the current 2025-26 sugar season, raising concerns over supply stability and regional stability. Due to decline in sugarcane production, sugar mills are finding it difficult to ensure adequate sugarcane supply.
According to the National Federation of Cooperative Sugar Factories (NFCSF), 248 of the 536 sugar mills that began crushing operations this season had closed operations by the end of February. In comparison, only 186 mills had closed by the same time last year. Industry observers say the main reason for the premature closure is the reduced availability of sugarcane, which has made it difficult for mills to continue crushing.
The sector was already under pressure after last year’s crop was affected by disease outbreaks and adverse weather conditions, which affected sugarcane productivity in key growing areas.
Despite these constraints, according to NFCSF data, cumulative sugar production till February 28 stood at 24.6 million tonnes, 2.6 million tonnes higher than the 22 million tonnes recorded during the same period last year. However, industry sources have indicated that with mills closing earlier than usual, total production seems less likely to reach 29 million tonnes by the end of the season.
The Indian Sugar and Bio-Energy Manufacturers Association (ISMA), representing private sugar mills, has estimated gross sugar production at 32.4 million tonnes for 2025-26. Of this, about 3.1 million tonnes is expected to be diverted for ethanol production, leaving net sugar production at about 29.3 million tonnes. This represents an increase of 12 percent from last year’s net production of 26.1 million tonnes. ISMA had estimated sugar production at 34.9 million tonnes at the beginning of the season.
However, with domestic consumption estimated at around 28.3 million tonnes and export quota at 0.7 million tonnes, the current production outlook suggests that no significant surplus stocks may remain at the end of the season. Opening stocks for the next season are expected to be around 50 lakh tonnes, almost at the same level as last year’s carryover.
Decrease in sugarcane production seen in Uttar Pradesh
Sugarcane production in Uttar Pradesh, the country’s largest sugarcane producing state, has fallen short of initial estimates. The widely cultivated Co-0238 variety became vulnerable to the disease and farmers reportedly did not find suitable replacement varieties in time, affecting production.
Sugar mills in the state crushed 73.7 million tonnes of sugarcane till February 28, about 3 million tonnes less than the same period last year. However, sugar recovery has improved to 10.05 percent this season compared to 9.45 percent last year. As a result, sugar production in Uttar Pradesh reached about 7.4 million tonnes by the end of February, slightly higher than 7.2 million tonnes in the same period last year.
Of the 120 mills in the state, 18 have already been closed, and several more may stop operations by mid-March. Total sugar production in Uttar Pradesh is expected to remain broadly stable at around 9.2 million tonnes as last year.
Maharashtra and Karnataka: Mixed trends
In Maharashtra and Karnataka, the major sugarcane producing states of western and southern India, production has also been below initial estimates due to disease incidence and adverse weather, including early flowering of sugarcane crops.
As of February 28, Maharashtra’s sugar production reached 9.5 million tonnes, compared to 7.5 million tonnes in the same period last year. However, 130 out of 210 mills in the state have already stopped crushing. Total production is estimated to reach about 10.6 million tonnes by the end of the season.
Karnataka has produced 44 lakh tonnes of sugar so far, which is more than 38 lakh tonnes during the same period last year. Yet, 60 of its 81 mills remain non-operational. Final production in the state is expected to reach about 4.8 million tonnes.
Ethanol diversion and export barriers
The ethanol blending program established as an additional revenue source for sugar mills is also showing signs of slowing down. ISMA has revised its estimate of sugar diversion for ethanol for the current season to 3.1 million tonnes from 3.5 million tonnes.
On the export front, weak global sugar prices have made shipments less attractive. Although the central government has allowed export of one million tonnes of sugar, the industry estimates that only 0.7 million tonnes can actually be exported by the end of the season.
With early closure of mills, moderate ethanol usage and slow export prospects, the sugar sector faces a delicate balance. For millions of sugarcane growers and mill operators, the coming months will be critical in determining whether the industry can stabilize after consecutive seasons of climate and agriculture-related stress.
