The National Federation of Cooperative Sugar Factories Ltd., the apex body representing farmer-owned cooperative sugar mills across the country, has called for an immediate upward revision of the Minimum Selling Price of sugar, warning that the widening gap between rising production costs and falling market prices is pushing mills and sugarcane farmers into severe financial stress.
While welcoming the Union government’s decision to allow exports of 15 lakh tonnes of sugar for the 2025–26 sugar season, the Federation underlined that export permissions alone will not resolve the deep liquidity crunch affecting the cooperative sugar sector.
The current sugar season has begun on a robust note, aided by early crushing operations, better yields and improving recovery rates. As of mid-December 2025, 479 sugar mills across India have produced nearly 78 lakh tonnes of sugar, a sharp rise of over 28 percent compared to the same period last year. Cane crushing has also increased significantly, accompanied by an encouraging trend in sugar recovery.
Major sugar-producing states have reported strong performances. Uttar Pradesh has seen higher recovery rates and increased sugar output, Maharashtra has recorded a substantial jump in production compared to last season, and Karnataka has also posted steady gains. Several other states together account for a significant share of national output, although their production is marginally lower than last year.
Despite this positive production scenario, the financial position of sugar mills has deteriorated. Average ex-mill sugar prices across the country have fallen by nearly 2,300 rupees per tonne since the start of the season and are currently hovering around 37,700 rupees per tonne.
This sharp decline has strained mill finances, directly affecting their capacity to make timely payments to farmers for sugarcane supplied. With cane costs continuing to rise due to higher Fair and State Advised Prices, along with escalating harvesting and transportation expenses, the cost of sugar production has increased substantially.
Against this backdrop, the Federation has urged the government to revise the sugar MSP to 41 rupees per kg to reflect current cost realities and ensure sectoral stability. It has also sought an increase in ethanol procurement prices and the diversion of an additional 5 lakh tonnes of sugar towards ethanol production.
According to the Federation, such diversion could generate close to 2,000 crore rupees, significantly improving cash flows for mills and enabling them to clear cane dues on time. It has further pointed out that higher diversion towards ethanol would reduce surplus sugar availability, particularly in Maharashtra and Karnataka, where ethanol blending plays a crucial role in balancing supply.
At a broader level, cane dues payable to farmers this season are estimated to exceed 1.30 lakh crore rupees, while excess sugar stocks could block working capital of nearly 28,000 crore rupees.
The Federation has conveyed these concerns to the highest levels of the government, stressing that timely policy intervention is essential to protect farmer incomes and maintain confidence in the cooperative sugar framework.
The Federation has reiterated that cooperative sugar mills are owned by millions of farmers, and sustaining the current momentum of the sugar season requires decisive and forward-looking support.
It has emphasized that appropriate policy measures will not only stabilize the sugar sector but also contribute to renewable energy goals and self-reliance by strengthening ethanol production, ensuring that the gains of the 2025–26 season translate into lasting and equitable outcomes.