Government lifting restriction on sugarcane use raises hope of sugar mills
sugarcane to produce ethanol could increase the closing stocks of sugar from the multi-year low of the previous season, leading to some moderation in the soaring sugar prices, say experts and industry stakeholders.
Industry observers say as the government has a focus on the ethanol blending programme, more relaxation is likely if sugar surplus is in line with the estimates after the crushing season ends in the first quarter of FY25.
Khushbu Lakhotia, Director, India Ratings & Research, says: “While the government has now allowed ethanol production through both cane juice and B- heavy (a category based on sucrose content) molasses, the sugar diversion has been capped at 1.7 million tonnes (MT), which is around 60% lower than the last season and similar to the diversion without cane juice under the order passed on December 7. Even under the revised order, India’s sugar production could increase by 2-2.5 MT to around 31 MT.
In comparison, India consumes around 28 MT sugar annually and the move could increase closing stocks from the multi-year low of last season.”
The government had on December 16 issued an order reversing the ban on the use of sugarcane juice to make ethanol. The food ministry also allowed utilisation of the juice as well as B heavy molasses to produce the green fuel in the 2023-24 supply year.
