Lucknow: Uttar Pradesh is witnessing a steady decline in sugar production and sugarcane crushing despite relatively strong sugarcane availability, with an increasing quantity of cane being diverted to khandsari units and other alternative uses. The trend has created a growing gap between the amount of sugarcane produced by farmers and the quantity ultimately reaching sugar mills for crushing. The development comes at a time when sugar prices are rising and the domestic market is facing tighter supply conditions.
According to official data from the Uttar Pradesh Cane Development Department, sugar production has declined continuously over the past four crushing seasons. Sugar output fell from 104.82 lakh metric tonnes (LMT) in 2022-23 to 104.13 LMT in 2023-24. Production then dropped sharply to 92.45 LMT in 2024-25 and declined further to 89.52 LMT in 2025-26. The fall represents a decline of more than 14% from 2022-23 levels.
The decline in sugar production is particularly significant because sugarcane production has remained comparatively strong. Uttar Pradesh produced 2,494 LMT of sugarcane in 2023-24 and 2,456 LMT in 2024-25, both substantial volumes compared with previous years. Cane production declined to 2,362 LMT in 2025-26, but remained high enough to indicate that lower sugar output cannot be explained simply by a shortage of sugarcane.
The volume of sugarcane crushed by mills has also fallen considerably. Cane crushing declined from 1,098.82 LMT in 2022-23 to 981.68 LMT in 2023-24. It fell further to 956.09 LMT in 2024-25 and dropped to 878.12 LMT in 2025-26. Overall, sugar mills crushed more than 220 LMT less sugarcane in 2025-26 compared with 2022-23. 
Industry experts say the data indicate that a smaller share of the state’s sugarcane crop is reaching sugar mills. While farmers continue to produce large quantities of cane, an increasing portion appears to be finding its way into alternative processing channels, particularly khandsari units. These units have become more attractive in several areas because of favourable returns and local demand, creating additional competition for sugar mills seeking cane supplies.
Industry sources estimate that the diversion of sugarcane to khandsari units may have resulted in a loss of around 5 LMT of sugar production in the state. With sugar prices currently witnessing an upswing, the industry has raised concerns over the availability of cane for organised sugar mills. It has urged the Uttar Pradesh government to allow local khandsari units to begin crushing at least one month after sugar mills start operations during the upcoming 2026-27 crushing season.
Historical data further highlight the changing relationship between sugarcane production and sugar output in Uttar Pradesh. In 2019-20, the state recorded its highest-ever sugar production of 126.37 LMT even though sugarcane production stood at around 2,172 LMT, significantly lower than the cane production recorded in recent years. Sugar mills crushed a record 1,118.02 LMT of sugarcane during that season, enabling them to achieve the highest sugar output.
The comparison suggests that the size of Uttar Pradesh’s sugarcane crop is no longer the only major factor determining sugar production. Instead, the proportion of cane that reaches sugar mills for crushing has become increasingly important. Even with more than 2,300 LMT of cane production in recent years, lower mill crushing has resulted in a significant decline in sugar output.
Experts also point to the growing influence of India’s ethanol blending programme on the sugar industry. Over the past few years, sugar mills have increasingly sought flexibility in using sugarcane juice, syrup and molasses for ethanol production. At the same time, farmers in several cane-growing districts have access to alternative markets through gur and khandsari units, giving them more options for selling their sugarcane.
The combination of alternative cane markets, khandsari production and changing sugar mill priorities has altered the traditional relationship between cane availability and sugar production. As more sugarcane is diverted away from conventional sugar mills, higher cane production does not necessarily translate into higher sugar output.
The trend could become increasingly important for Uttar Pradesh’s sugar market during the 2026-27 crushing season. With sugar prices rising and domestic supplies under pressure, the availability of sugarcane to mills will be closely watched by the industry. The demand for a delayed start for khandsari crushing reflects the sugar mills’ attempt to secure adequate cane supplies and maximise sugar production during the new season.
For Uttar Pradesh, the key challenge is therefore not simply producing more sugarcane but ensuring an adequate balance between cane diversion and sugar production. Unless a larger share of the available cane reaches sugar mills, the state could continue to see lower sugar output even when the overall sugarcane crop remains strong.
