The government’s decision to raise the Fair and Remunerative Price (FRP) of sugarcane to Rs 365 per quintal for the 2026-27 season has renewed focus on the financial position of both farmers and sugar mills.
While the revised FRP aims to support sugarcane growers, industry representatives and analysts say rising cane prices, stagnant sugar selling prices and lower ethanol allocations are increasing pressure across the sector.
FRP Increased for 2026-27 Sugar Season
The Centre recently approved a Rs 10 per quintal increase in sugarcane FRP for the 2026-27 marketing season, taking the price from Rs 355 to Rs 365 per quintal.
The FRP is the minimum amount sugar mills must pay farmers for sugarcane. India’s sugar marketing season runs from October to September.
Industry body Indian Sugar & Bio-energy Manufacturers Association (ISMA) said the revision could increase total cane payments to nearly Rs 1.3 lakh crore in the upcoming season.
Sugar Mills Seek Increase in Sugar MSP
Industry executives said the rise in FRP would increase raw material costs for mills at a time when sugar prices remain unchanged.
The minimum selling price (MSP) of sugar has stayed at Rs 31 per kg since February 2019, despite multiple increases in sugarcane FRP over recent years.
Stakeholders have called for revisions in sugar MSP and ethanol procurement prices to maintain industry viability and support timely farmer payments.
Ethanol Shift Impacts Sugar-Based Producers
Industry experts said ethanol production patterns have changed significantly in recent years, with grain-based feedstocks such as maize and rice gaining a larger share in the ethanol blending programme.
According to sector estimates, the share of ethanol produced from sugar-based feedstocks declined to 28% during the 2025-26 Ethanol Supply Year (ESY), compared to more than 70% in earlier years.
Analysts noted that sugar mills have invested heavily in ethanol production infrastructure, but lower allocations and changing feedstock trends are affecting utilisation levels.
Farmers Cite Rising Cultivation Costs
Farmer organisations said the latest FRP increase may not fully offset higher cultivation, harvesting and transportation costs.
Representatives from farmer groups stated that sugarcane production expenses have risen steadily in recent years, reducing profit margins for growers despite annual FRP revisions.
The sugarcane FRP has increased from Rs 340 per quintal in 2024-25 to Rs 355 in 2025-26 and Rs 365 for the 2026-27 season.
Concerns Over Cane Arrears and Mill Margins
Market experts said the gap between rising input costs and stagnant sugar prices is affecting cash flows for sugar mills.
Analysts added that increasing operational costs and lower ethanol revenues could impact mills’ ability to clear farmer dues on time, leading to higher cane arrears.
According to Crisil Intelligence, input costs in sugarcane cultivation have continued to rise between marketing years 2021 and 2026, while weather-related risks and fertiliser shortages remain additional concerns for the sector.
Sugar Production Higher in Current Season
ISMA data showed India’s sugar production rose 7.32% to 27.52 million tonnes (MT) till April 30 in the 2025-26 season, compared to 25.64 MT in the same period last year.
Maharashtra and Karnataka recorded higher production during the season, while Uttar Pradesh saw a decline in output.
The industry body has projected total sugar production for 2025-26 at 29.3 MT after ethanol diversion, compared with 26.12 MT in 2024-25.
