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India's Sugar Quota Boosts Consumption to Record High Amid Soaring Demand

India has set a September sugar quota of 2.35 million tonnes, pushing total consumption for the 2023-24 season to a record 29.15 million tonnes. This surge is driven by unprecedented demand due to severe heatwaves and nationwide election campaigns. Monthly quotas are carefully managed to align with market needs, ensuring stable prices and supply.

Highlights

September Sugar Quota: India has allocated a quota of 2.35 million tonnes (mt) of sugar for September 2024 sales in the open market. This is part of a government strategy to regulate sugar distribution and stabilize market prices.

Record Consumption Estimate: For the 2023-24 season (October-September), India’s sugar consumption is estimated at a record 29.15 mt, up from 27.65 mt in the previous season. This increase is attributed to high demand driven by a severe heatwave and election campaigns.

Monthly Quota Allocation: The Food Ministry allocates monthly sugar quotas based on past production and sales records. Any unsold quantities are added to the next month’s quota, ensuring that supply aligns with market demand.

Production vs. Consumption Growth: Over the past five years, sugar consumption has grown by 20%, while production has increased by 17%, rising from 27.41 mt in 2019-20 to 32 mt in 2023-24. This shows a slightly higher growth in consumption compared to production.

Sugarcane Production Target: The Agriculture Ministry aims for a sugarcane production target of 470 mt for the 2024-25 crop year, which may result in lower sugar production around 31 mt due to commitments for ethanol production.

Ethanol Blending Impact: Ethanol blending with petrol has been increased to 15% for the current year. Although sugar production might be lower, the shift towards ethanol blending is a strategic move to diversify sugarcane use and support energy sustainability.

Conclusion

India's sugar consumption is reaching new heights, reflecting strong market demand and strategic government planning. While production has kept pace with this rising consumption, the ongoing shift towards ethanol blending presents new challenges. With the Agriculture Ministry's ambitious sugarcane production targets, balancing sugar supply and ethanol commitments will be crucial in maintaining market stability and meeting future energy needs. The government’s proactive approach in adjusting monthly quotas ensures that the industry remains responsive to both domestic and global market dynamics.

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