Overview of Sugar Season 2024–25: A Year Marked by Severe Adversities
The Sugar Season 2024–25 has proven to be exceptionally challenging for Maharashtra’s sugar sector, with multiple adversities converging to create an environment of distress for all stakeholders involved—from farmers and factory workers to sugar mill management and financial institutions.
1. Unfavourable Climatic Conditions and Agronomic Setbacks
Nature offered little support during the season. Irregular and deficient rainfall patterns coupled with rising temperatures severely impacted sugarcane cultivation. This resulted in significantly reduced cane yields and poor crop health across key growing regions.
2. Decline in Sugar Recovery and Production
The compounded effect of agro-climatic stress led to a substantial drop in sugar recovery rates. Consequently, sugar production remained far below expectations. Many factories had to prematurely terminate operations, restricting the crushing season to an average of only 100 days—well below the optimal operational duration.
3. Escalation in Operational Costs
Despite the curtailed season, overhead expenses remained largely fixed or even increased due to inflationary pressures, leading to severe financial stress for sugar factories. The mismatch between operating costs and revenue generation created unsustainable margins.
4. Absence of Policy Support
The industry’s appeal for a revision in the Minimum Selling Price (MSP) of sugar and upward revision of ethanol procurement prices—especially in light of the increased Fair and Remunerative Price (FRP) of sugarcane—remained unaddressed. This lack of policy responsiveness further deepened the financial strain on mills.
5. Mounting Financial Liabilities and Institutional Stress
Factory cash flows were severely disrupted, resulting in delays in FRP payments to farmers. A significant portion of cane dues remains unpaid, which has not only strained farmer livelihoods but has also affected socio-political sentiment in rural areas. Additionally, delays in the disbursement of export quotas and lack of timely support for exports led to inventory pile-ups and blocked working capital. Most factories have exhausted their sanctioned bank loan margins, and many are struggling to service outstanding loan instalments.
6. Human Capital Distress
Employees of sugar factories are also bearing the brunt of the crisis. Wage disbursements have been delayed or remain pending in many units, affecting thousands of families dependent on the sugar sector for livelihood.
Conclusion: An Industry in Crisis
The cumulative impact of natural, economic, and policy-level constraints during Sugar Season 2024–25 has pushed the industry into a state of acute distress. Immediate and decisive intervention is necessary to stabilise the sector, ensure timely payments to farmers and workers, and revive the confidence of banks and investors. Without such measures, the sustainability of the sugar economy in Maharashtra stands at considerable risk.
P. G. Medhe (9822329898)
1) Ex MD, Rajaram Co-Opp. Sugar Factory 2) Sugar Industry Analyst, Kolhapur
