Sugar prices in India have eased after last month's spike, but the fall at the factory gate is reaching consumers only slowly, according to officials and the co-operative sugar industry.

The Food Ministry said last week that retail sugar prices had fallen about 10 per cent to Rs 58.50 a kilo from an August peak of Rs 65, while ex-mill prices had already dropped nearly 25 per cent. "The slower decline in retail prices indicates that the benefit of the reduction in ex-mill prices has not yet been fully transmitted through the supply chain to the consumers," an official note said. The Department of Consumer Affairs' price monitoring cell put the average retail price at Rs 58.02 a kilo on Tuesday, 25 per cent higher than a year earlier but 3 per cent lower than a month ago.

"While ex-mills prices have declined significantly since their peak last month, the fall in retail prices is not at the same pace," said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories (NFCSF).

The industry says mills did not reap windfall gains: between 17 and 31 August they sold only about 0.72 million tonnes at an average ex-mill price of Rs 4,996.98 a quintal, and dispatch data show the surge was temporary and confined to a narrow window. It expects prices to soften further in the coming weeks.

The government blamed the spike on lower output after weather damage, festive-season demand, high world prices and hoarding by some producers; the industry points to speculative buying by traders and bulk consumers and lower-than-estimated production, and says there is no shortage. Production has fallen 27 per cent to about 28.1 million tonnes in 2025-26 from 35.8 million tonnes in 2021-22, while consumption rose to 28.7 million tonnes from 27.3 million over five seasons, and opening stocks for the 2026-27 season are expected at only 3.5 million tonnes, the lowest in a decade.

Last month the government allowed duty-free imports of 1 million tonnes of raw sugar, the first in a decade, alongside a crackdown on hoarding and a cap on inventories held by bulk buyers.

The report was written by Sandip Das.

Photo: Adityamadhav83 / Wikimedia Commons (CC BY-SA 3.0)

Source: Financial Express Agriculture