Why is there a sudden increase in sugar prices | Explained

The Story So Far: Retail and wholesale prices of sugar witnessed about 40% increase, in some States up to 50%, compared to the same time of last year. In eight States such as Uttarakhand, Punjab, Madhya Pradesh, and Odisha, the price for a kilogram of sugar touched more than ₹65. As on August 23, Odisha recorded the highest price, ₹67.4 for a kilogram, which was ₹55 a week ago, ₹50.78 a month ago, and ₹46.89 on August 23, 2025. Even as the Opposition raised the issue last week, the Government was unable to curb the price rise. The Opposition blamed the diversion of sugarcane for ethanol production as the reason for the sharp increase in sugar prices. Farmers’ groups argued that the price rise was artificially created by big traders ahead of the festive season. The Government responded by stating it is monitoring the situation closely and cited factors like lower-than-expected domestic production, increased demand ahead of the festive season, weather-related damage to the sugarcane crop, tightening global sugar supplies, and speculation and hoarding by some sections of the industry as reasons for the price hike. The Union Commerce Ministry allowed the import of 10 lakh metric tonnes of sugar till October 31, 2026. Current Prices and Variations: The all-India average price for a kilogram of sugar was ₹46.3 on August 23, 2025, but rose to ₹62.47 on August 23, 2026, marking a 34.92% increase. The price surge began within a month, rising from ₹48.62 on July 23, 2026, indicating a 28.49% increase in 30 days. Wholesale rates for 100 kilograms of sugar also increased from ₹4,510.76 a month ago to ₹5,801.29 on August 23, 2026, up from ₹4,313.32 on the same date last year. About 18 States and Union Territories saw a 40% to 50% increase in sugar prices over the year. In Uttarakhand, the price rose from ₹45 to ₹67, in West Bengal from ₹47.5 to ₹66.17, in Rajasthan from ₹43.33 to ₹65, in Madhya Pradesh from ₹44.98 to ₹65.38, and in Delhi from ₹45 to ₹65. The Opposition’s Allegations and Union Government’s Claims: The Opposition accused the Government’s ethanol blending program in fuels of diverting sugarcane, reducing sugar output and pushing prices up by ₹20 per kilogram in 17 days. Aam Aadmi Party chief Arvind Kejriwal demanded a review of the E20 policy and non-ethanol petrol provision. Congress general secretary Jairam Ramesh criticized the Government’s decisions, stating that consumers are paying for both expensive food and travel due to the policies of the Narendra Modi government. In response, the Union Consumer Affairs Ministry denied attributing the price rise to ethanol diversion, stating that ethanol production from sugarcane has declined from 12% to 9% and that most ethanol now comes from grains like maize. The Government also imposed stock limits on sugar dealers and restricted bulk consumers from holding sugar stocks exceeding 15 days of consumption. Scam Allegations by Farmers: A sugarcane farmer from Maharashtra, Ajit Nawale, leader of All India Kisan Sabha, claimed that Government policies favored big retail chains, leading to steep price increases. He argued that domestic sugar production is around 320-340 LMT annually, with consumption at 280-290 LMT, and that stock levels are around 38 LMT, less than last year’s 42 LMT. He accused big traders of hoarding and black-marketing, stating that the Government failed to control these practices ahead of the festive season. Principal scientist Lal Singh Gangwar from the Indian Institute of Sugarcane Research noted that a 10% increase in retail sugar prices around the festive season is normal. He attributed input cost increases for farmers and sugar mills to higher diesel and fertilizer prices due to the war in West Asia. The Government had previously capped sugarcane juice use for ethanol production.