The Maharashtra sugar mills seem to get no respite in the new sugar season of 2025–26. It is once more facing a familiar squeeze of tightening liquidity, a season that is turning short faster than the industry can cope with.
The latest data from the Maharashtra Sugar Commissionerate shows that sugar mills have paid 86.34% of the Fair and Remunerative Price (FRP) for the 2025–26 season, with cash flows amounting to ₹29,096 crore deposited directly into farmers’ bank accounts.
But the remaining ₹4,601 crore, still outstanding, looms large over an industry whose structural imbalances become increasingly hard to ignore.
Only 49 mills out of 206 have cleared the full FRP. Almost three-quarters of mills owe farmers money despite operating in a year with consistent sugar output.
A decade ago, in Maharashtra, sugarcane was milled for nearly 150 days a year. By 2024–25, the season had collapsed into only 100–102 days.
The 2025–26 season is on a similar trajectory. Despite an increase in total crushing capacity from 6.85 lakh TCD in 2015–16 to 10.45 lakh TCD today, the area under sugarcane is falling from its peak of 14.88 lakh hectares in 2021–22 to 13.73 lakh hectares in 2024–25.
The Maharashtra model, with its aggressive growth of mills, has collided with land shortages, water stress, changing crop economics and farmers moving to alternative plantations. Except for 8-10 mills, most have not been crushing in full production capacity, and their cost structure and cash flow have dropped accordingly.
Every tonne is more expensive to process when plants are less than fully utilised. This was already a double-edged sword for the industry on its finances.
Sugar sales have been sluggish; demand is steady but not robust enough to clear inventories promptly.
The sugar mills are selling sugar below the production cost, a pattern which directly affects their ability to pay farmers in line. Although the Centre announced an export programme in good time, global sugar prices are still well below domestic realisations, deterring sales.
In prior years, contracts for ethanol provided a steady source of income on a weekly basis. This season, cuts to allocation have left mills almost completely dependent on sugar sales, rejuvenating old funding bottlenecks.
Power export revenues are down from the previous season, deepening the cash-flow strain. With FRP up and sugar realisations down, mills are struggling with widening margins.
In brief, the financial framework of Maharashtra’s sugar industry is coming undone under pressure.
50 mills have already closed their operations this year. The reasons are interconnected- lower yield rates of cane in some regions, high sugarcane costs, weak market prices and limited working capital.
Continuing in this environment would only be inflating arrears and spreading losses.
The industry is calling on the government to implement a strategic intervention package, viz., restoring higher ethanol allocation, and revision of the Minimum Selling Price (MSP) of sugar.
The current MSP no longer reflects rising production costs.
The current arrears of ₹4,601 crore are not merely a matter of timing; they represent a product which is under tension with its overcapacity, fluctuating prices and inconsistent policy cues.
The state now finds itself at a critical juncture. Either it reforms now, or it runs the risk of sitting on a ticking time bomb that will have consequences for mills and farmers alike.
Serious structural reforms in Maharashtra’s sugar sector, and not seasonal firefighting, are overdue. It is crucial that farmers receive timely FRP. But mills must be financially able to provide it in turn.
