India’s vital sugar industry is facing a double whammy. First, it’s the shift towards grain-based ethanol production. Now, a new worry is emerging: a steady drop in the nation’s sugar consumption. This decline is raising concerns about potential surplus stocks and the industry’s overall financial health.
The government’s ‘Eat Right Campaign’ aims to promote healthier lifestyles by encouraging reduced intake of sugar and oil. While this is good for public health, the sugar industry fears a long-term negative impact on its demand. Industry experts predict that domestic sugar consumption for the 2024-25 season might fall to around 275 lakh tonnes. This would be a significant decrease from the 291 lakh tonnes consumed in the previous year, marking the first such drop in over a decade.
Several factors are contributing to this slowdown. High retail prices for sugar are making it less affordable for many. Additionally, government health initiatives, like those by the Food Safety and Standards Authority of India (FSSAI), are raising awareness about lifestyle diseases such as diabetes and obesity, prompting people to cut back on sugary products. Changing consumer preferences also play a role, with more people opting for healthier alternatives.
This situation comes at a time when the industry is already adjusting to the government’s increased focus on grain-based ethanol. Ethanol, a biofuel, is being promoted to meet renewable energy goals and reduce pollution. While ethanol can be produced from sugarcane byproducts like molasses, the government is also encouraging its production from grains such as maize and broken rice. This shift towards grain-based ethanol is seen as more profitable for some producers, diverting resources and attention away from sugar production.
Industry leaders are working to counter misinformation about ethanol blending. “A lot of rumours are being spread about ethanol blending, which has to be countered with scientific knowledge,” stated B B Thombare, chairman and managing director of Latur-based Natural Sugar and Allied Industries. He stressed the need for accurate information to manage public perception.
To manage the expected surplus and support the industry, sugar manufacturers are seeking government approval for exports. They hope to export 20-25 lakh tonnes of sugar, particularly during January and February when global sugar supplies are typically lower. This strategy aims to balance domestic demand, ethanol diversion, and international sales.
The National Sugar Board is expected to play a crucial role in navigating these challenges. It will help balance domestic demand, ethanol production, and export opportunities. Prakash Naiknavare, managing director of the National Cooperative Sugar Factories Federation, confirmed that while overall domestic consumption hasn’t decreased, industrial consumption has seen a decline. Many industries are switching to non-sugarcane-based sweeteners, leaving mills with unsold inventory.
Historical data shows fluctuations in sugar consumption over the past decade, but the current projected decline presents a unique challenge. The industry is now focused on adapting to these changing market dynamics and ensuring its sustainability in the face of evolving government policies and consumer behaviour.