El Nino and Drought Threaten India's Sugarcane Crop as Sugar Prices Rise 18.8%
An intensifying El Nino, combined with drought conditions in Maharashtra — among India's largest sugarcane-producing states — has raised concerns about the country's sugar output this year. The outlook for sugarcane has turned increasingly grim, with the World Meteorological Organization (WMO) warning that a severe rainfall deficit could reduce the sucrose content in cane, shrink the effective harvesting area and lower overall production.
El Nino is a periodic warming of the central and eastern Pacific Ocean that is typically associated with weaker monsoon rainfall over India. Its strength and duration therefore matter a great deal for rain-fed and irrigation-dependent crops.
"El Nino is firmly established and strengthening rapidly. WMO forecasts indicate a near-100 per cent likelihood that it will persist through February 2027, potentially being one of the strongest since at least 1950," WMO Secretary-General Celeste Saulo said.
According to the WMO, growing water shortages and drought-like conditions could also complicate milling operations in early 2027, adding to the impact of lower cane yields and reduced sugar recovery rates.
Prices already at elevated levels
The warning comes at a time when sugar prices are already high. Retail sugar stood at Rs 42.18 per kg on October 8, 2021, and remained largely stable over the following years, reaching Rs 46.49 per kg on October 8, 2025. Over the past year, however, prices have surged 18.8 per cent to Rs 55.21 per kg as on October 8, 2026, according to data from the Department of Consumer Affairs.
Why prices are rising
The government has attributed the recent spike to a combination of domestic and global factors. Production has come in lower than expected after adverse weather damaged sugarcane crops in key growing regions. At the same time, demand has strengthened with the onset of the festive season, while tightening global supplies have pushed international sugar prices higher. Authorities have also flagged speculation and hoarding by sections of the trade as contributors to the surge in retail prices.
Why the sugar industry matters
Sugarcane is more than an agricultural commodity. The sector supports the livelihoods of nearly five crore farmers and sustains around five lakh jobs in sugar mills and allied industries. A weak crop therefore affects not only sugar availability and prices but also rural incomes, mill operations and the wider agricultural economy.
The industry has also become an important pillar of India's ethanol blending programme, with a portion of sugar output diverted each year for ethanol production. Any prolonged stress on the sector can therefore have consequences beyond food and farming.
Sugar is a widely consumed everyday item and a closely watched entry in India's inflation basket, which is why swings in its retail price attract close official attention.
What lies ahead
India is not facing an immediate sugar shortage, and existing stocks are expected to meet domestic demand. But the coming months will be crucial. If El Nino strengthens further and dry conditions persist, lower cane yields and reduced sugar recovery could tighten supplies further.
The 2026-27 season may ultimately determine whether the current price spike proves temporary or marks the beginning of a more prolonged period of stress for India's sugar sector. For consumers, the immediate effect is on household budgets; for farmers and mill workers, it is on incomes and employment.
