Sugar Shortage Threatens India's Food Security Amid Rising Ethanol Demand
The Indian sugar industry is facing a crisis due to lower sugarcane production and diversion of sugar for ethanol and exports. As a result, sugar prices have risen sharply from ₹49 per kg at the end of July to ₹65 per kg at the end of August.
The demand for ethanol has remained high due to the introduction of E20 petrol, which contains 20% ethanol, across India from April 2026. With more than 25% of India's ethanol supply coming from sugarcane-based feedstock, the sugar shortage could force ethanol makers to rely more heavily on maize and rice.
Chandra Kumar Jain, president of the Grain Ethanol Manufacturers Association, estimates that maize demand for ethanol could rise by 40-50% next year if rice supplies remain unchanged. However, India's maize production is expected to fall by 10% in 2026-27 due to lower rainfall and reduced acreage.
The shortage of maize could lead to higher prices of poultry feed, which is a major source of energy for poultry birds. This could result in increased costs for eggs and chicken, with wholesale egg prices already touching ₹6.70 per egg in July, nearly 39% higher than a year earlier.