Kozhikode, Kerala: The rollout of E20 petrol has begun to impact sugar prices in Kerala, with wholesale rates rising by ₹520 per quintal over the past month, according to traders.

They attribute the increase to the growing diversion of sugarcane for ethanol production to meet the demand generated by the E20 fuel programme, leading to lower sugar output.

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Sugar, which was priced at ₹4,380 per quintal in June, is now selling at around ₹4,900 per quintal in Kerala. In the retail market, prices are expected to increase by up to ₹6 per kg.

India is the world’s second-largest producer of sugarcane, with major cultivation concentrated in Maharashtra, Uttar Pradesh, Tamil Nadu and Karnataka. A significant share of Kerala’s sugar supply comes from Maharashtra.

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Traders said delayed monsoon rains caused by the El Niño phenomenon also affected sugarcane cultivation, adding pressure on sugar production.

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They noted that producing ethanol directly from sugarcane has become more profitable for sugar mills than manufacturing sugar, encouraging greater diversion of the crop toward biofuel production.

Meanwhile, the Central government has extended restrictions on sugar exports until September 30 to ensure adequate domestic availability after climate-related production concerns.